{"id":310785,"date":"2026-07-31T15:31:09","date_gmt":"2026-07-31T15:31:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ny\/310785\/"},"modified":"2026-07-31T15:31:09","modified_gmt":"2026-07-31T15:31:09","slug":"ny-sues-kalshi-over-alleged-illegal-gambling-operation-as-prediction-market-war-heats-up","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ny\/310785\/","title":{"rendered":"NY sues Kalshi over alleged illegal gambling operation as prediction market war heats up"},"content":{"rendered":"

New York on Friday sued Kalshi, accusing the federally regulated prediction market operator of running an illegal gambling business<\/a> in the Empire State in the latest legal challenge to one of the country\u2019s hottest startups.<\/p>\n

The lawsuit, filed in Manhattan state court by Attorney General Letitia James, alleges Kalshi has been offering New Yorkers illegal gambling products without a state license, exposing consumers \u2014 including some between the ages of 18 and 20 \u2014 to financial harm while avoiding taxes and regulatory obligations imposed on licensed sportsbooks.<\/p>\n

The case, which was first reported by Bloomberg News<\/a>, marks the latest escalation in the increasingly contentious battle over prediction markets, which has also spilled into a deeply personal feud between Kalshi and chief rival Polymarket.<\/p>\n

Kalshi is facing a lawsuit from New York Attorney General Letitia James, who alleges the federally regulated prediction market operator is running an illegal gambling business in the state. IMAGN IMAGES via Reuters Connect<\/p>\n

As The Post exclusively reported Friday, the rivalry between the two firms has become increasingly vicious<\/a> behind the scenes, with Polymarket CEO Shayne Coplan allegedly referring to Kalshi as a \u201ccopycat,\u201d circulating unsubstantiated personal rumors about Kalshi co-founders Tarek Mansour and Luana Lopes Lara and growing increasingly frustrated as Kalshi surpassed Polymarket in trading volume.<\/p>\n

Sources told The Post that Coplan became enraged after Donald Trump Jr. joined Kalshi as a strategic adviser<\/a> before later also joining Polymarket, while both companies have traded accusations over leaks, dirty tricks and efforts to undermine one another.<\/p>\n

Kalshi has denied allegations of corporate espionage while Polymarket has denied Coplan spread the alleged rumors.<\/p>\n

Friday\u2019s lawsuit adds another headache for Kalshi, which has argued that because it operates as a federally regulated exchange overseen by the Commodity Futures Trading Commission, states cannot shut down its markets.<\/p>\n

\u201cIt\u2019s sad to see this type of political theater from the leadership in our own state,\u201d Kalshi spokeswoman Elisabeth Diana said in a statement to Bloomberg News.<\/p>\n

Kalshi co-founder and COO Luana Lopes Lara helped launch the company after graduating from MIT with co-founder Tarek Mansour. Sportsfile via Getty Images<\/p>\n

\u201cStates can\u2019t just shut down a federally licensed exchange. This would also hurt New Yorkers, who would be driven offshore.\u201d<\/p>\n

Gov. Kathy Hochul and James countered that Kalshi has ignored New York\u2019s gaming laws by failing to obtain a license from the New York State Gaming Commission while sidestepping taxes and consumer protection rules that apply to casinos and mobile sportsbooks.<\/p>\n

\u201cKalshi has chosen to ignore New York\u2019s gaming laws, which exist to protect consumers, prevent problematic gambling, deliver funding for critical public services, and ensure that every company plays by the same rules,\u201d Hochul said.<\/p>\n

\u201cThis choice has consequences, and working closely with Attorney General James, New York is taking action to stop this illegal behavior and bring Kalshi into compliance, because no company is above the law.\u201d<\/p>\n

The complaint follows a separate setback for Kalshi earlier this month, when a New York judge ruled the company could not block state gaming regulators from overseeing its sports prediction markets, even as the company has scored victories elsewhere arguing that federal law preempts state gambling regulations.<\/p>\n

Kalshi co-founder and CEO Tarek Mansour has defended the company\u2019s prediction markets as federally regulated financial products amid mounting legal challenges from state regulators. Sportsfile for Web Summit via Getty Images<\/p>\n

Kalshi co-founders Tarek Mansour and Luana Lopes Lara have built the startup into one of the largest prediction-market platforms in the US as it battles regulators over its business model. EMMY PARK<\/p>\n

According to the complaint, New York contends Kalshi\u2019s prediction markets \u201cmeet the legal definition of gambling because the outcomes of the events on which its users are betting are uncertain and outside the control of the bettor or hinge on a game of chance.\u201d<\/p>\n

The suit comes as Kalshi has rapidly expanded from election betting into markets tied to sports, entertainment, weather and other real-world events, helping propel the company ahead of Polymarket in trading volume.<\/p>\n

The Post has sought comment from Kalshi, Hochul and James.<\/p>\n","protected":false},"excerpt":{"rendered":"New York on Friday sued Kalshi, accusing the federally regulated prediction market operator of running an illegal gambling…\n","protected":false},"author":2,"featured_media":310786,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[288,13034,426,398,9,11,10,49,51,50,13672],"class_list":["post-310785","post","type-post","status-publish","format-standard","has-post-thumbnail","category-new-york","tag-business","tag-kalshi","tag-kathy-hochul","tag-letitia-james","tag-new-york","tag-new-york-headlines","tag-new-york-news","tag-new-york-state","tag-new-york-state-headlines","tag-new-york-state-news","tag-polymarket"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/310785","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=310785"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/310785\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/310786"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=310785"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=310785"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=310785"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}