New York Files Lawsuit Against Kalshi Over Alleged Illegal Gambling

WHO:

CNN - Attorney General Letitia James is leading the lawsuit against Kalshi.

Cointelegraph - New York's attorney general is involved in the lawsuit against Kalshi.

Techmeme - The Commodity Futures Trading Commission (CFTC) is also involved in the legal proceedings.

WHAT:

Fast Company - The lawsuit seeks to force Kalshi to pay restitution to consumers who made bets on the platform, surrender its proceeds, and pay triple its alleged gains, plus $100,000 for each unauthorized sports bet.

ESPN - The lawsuit requests heavy monetary penalties for Kalshi, with a minimum estimate of $36 billion pending a full accounting.

The Guardian - The lawsuit claims Kalshi has failed to obtain a license from the state gaming commission and skirted its obligation to pay taxes like licensed casinos and mobile sports gambling platforms do.

Bloomberg Markets - The lawsuit seeks a possible penalty that could cost Kalshi an estimated $36 billion.

ABC News - The lawsuit does not seek to close down Kalshi, but if successful, it could dent its ability to operate.

ABC News - The lawsuit requests heavy monetary penalties for Kalshi, including full restitution to its customers, "three times" the amount of the company's gain from illegal activities, and $100,000 for each attempt to offer unlicensed sports wagering in the state.

[10:49 AM EDT] - CBS News - The lawsuit seeks to force Kalshi to pay restitution to consumers who made bets on the platform, forfeit its profits, and pay fines equal to three times the amount it has generated through its operations in the state.

[10:49 AM EDT] - CBS News - The lawsuit alleges that Kalshi exposes state residents to financial and personal risk.

[10:49 AM EDT] - CBS News - The lawsuit also notes that Kalshi allows people who are younger than the state's legal gambling age of 21 to use its services.

[10:49 AM EDT] - CBS News - The combined monthly global trading volume on Kalshi, Polymarket, and similar platforms has soared from less than $5 billion in September 2025 to about $24 billion as of April 2026, according to the Pew Research Center.

[10:49 AM EDT] - CBS News - Americans bet an average of $14 billion per month on legal sports betting sites, according to the nonpartisan research firm Pew Research Center.

[10:49 AM EDT] - CBS News - The lawsuit seeks a court order demanding Kalshi submit to state regulators and taxes, to forfeit illegal profits and pay restitution to users nationwide, with a possible penalty estimated at $36 billion.

[10:49 AM EDT] - CBS News - The lawsuit claims that Kalshi violates state laws prohibiting wagering on games involving New York college teams and all sports betting for those under 21.

ABC News - The lawsuit seeks a court order demanding Kalshi submit to state regulators and taxes, to forfeit illegal profits and pay restitution to users nationwide, with a possible penalty estimated at $36 billion.

Bloomberg Markets - The lawsuit marks another major legal hurdle for an industry that has won support from the Trump administration.

Fast Company - The lawsuit also claims Kalshi has failed to obtain a license from the state Gaming Commission and skirted its obligation to pay taxes like licensed casinos and mobile sports gambling platforms do.

The Guardian - The lawsuit requests that Kalshi be ordered to forfeit all illegal gains, pay restitution to consumers who were harmed, and pay fines equal to three times the company’s gains.

Gothamist - The state alleges that Kalshi's prediction market is just a gambling operation in disguise.

Cointelegraph - The lawsuit seeks to halt Kalshi's operations in New York, force it to pay restitution to consumers who made bets on the platform, forfeit its profits, and pay fines equal to three times the amount it has generated through its operations in the state.

Techmeme - The lawsuit claims that Kalshi has been offering New Yorkers illegal gambling products without a state license.

Techmeme - The lawsuit adds to a growing clash between New York and the CFTC over whether federally regulated prediction markets are subject to state gambling laws.

Cointelegraph - The CFTC has filed an emergency motion to stop New York's enforcement actions, labeling them as an "overreach."

ABC News - The lawsuit could potentially cost Kalshi an estimated $36 billion in penalties.

ABC News - The lawsuit alleges that Kalshi violates state laws prohibiting wagering on games involving New York college teams and all sports betting for those under 21.

[10:49 AM EDT] - CBS News - The lawsuit seeks to halt Kalshi's operations in New York, force it to pay restitution to consumers who made bets on the platform, forfeit its profits, and pay fines equal to three times the amount it has generated through its operations in the state.

[10:49 AM EDT] - CBS News - The lawsuit claims that Kalshi exposes state residents to financial and personal risk.

[10:49 AM EDT] - CBS News - The lawsuit also notes that Kalshi allows people who are younger than the state's legal gambling age of 21 to use its services.

[10:49 AM EDT] - CBS News - Americans bet an average of $14 billion per month on legal sports betting sites, according to the nonpartisan research firm Pew Research Center.

CNN - Attorney General Letitia James stated, “No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple.”

Cointelegraph - The lawsuit adds to a growing clash between New York and the CFTC over whether federally regulated prediction markets are subject to state gambling laws.

Techmeme - A federal appeals court denied Kalshi’s request to pause a lower court’s ruling, allowing New York to file the lawsuit.

Bloomberg Markets - The lawsuit marks another major legal hurdle for an industry that has won support from the Trump administration.

Techmeme - The lawsuit is the latest brought by a state attorney general against an operator of prediction markets, which allows up or down bets on almost anything – from the Oscars to sports games.

CNN - Other states have previously filed lawsuits against Kalshi and its rivals, and the prediction markets have proactively sought to block some state commissions from oversight.

CNN - In May, Rhode Island sued Kalshi and Polymarket for unlawful sports betting. In April, the New York attorney general sued Coinbase and Gemini, alleging they are running illegal gambling operations in New York through their prediction market platforms.

CNN - A federal judge on Monday blocked Minnesota from enforcing its statewide ban on prediction markets. Days later, in a separate case in Wisconsin, a judge ruled that the state can regulate prediction markets like gambling.

CNN - So far, Nevada, Michigan, and Washington state have successfully shut down some or all of Kalshi’s operations in their states, as a result of lawsuits that are ongoing.

Bloomberg Markets - New York sued Kalshi Inc.’s trading subsidiary for allegedly running an illegal, unlicensed gambling operation in the state.

CNN - The lawsuit was filed in New York State court early Friday.

CNN - The lawsuit claims that Kalshi’s prediction market is open to users younger than the legal age in New York to participate in mobile sports betting.

CNN - A federal appeals court paved the way for New York to file the lawsuit after an appellate judge denied Kalshi’s request to pause a lower court’s ruling.

CNN - A person familiar with the case stated that there were negotiations to avoid a lawsuit, but talks broke down.

CNN - The lawsuit seeks an order enjoining Kalshi’s operations, plus fines, restitution, and the forfeiture of profits.

CNN - Kalshi is alleged to have failed to obtain a state gambling license and pay related taxes.

Cointelegraph - New York has filed a lawsuit against Kalshi, alleging illegal gambling operations.

Techmeme - The CFTC has filed an emergency motion to stop New York's enforcement actions, labeling them as an "overreach."

WHERE:

Cointelegraph - The lawsuit is filed in New York.

WHY:

Cointelegraph - The lawsuit highlights the broader legal battle over whether states or the federal government have the authority to regulate prediction markets, which allow users to bet on the outcome of sports, elections, and other events.

ABC News - Governor Kathy Hochul stated that Kalshi has chosen to ignore New York’s gambling 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.

[10:49 AM EDT] - CBS News - New York Governor Kathy Hochul accused Kalshi of ignoring the state's gaming laws.

CNN - Letitia James stated, “New York’s gambling laws protect children from underage betting and help combat gambling addiction.”

Techmeme - The lawsuit claims that Kalshi's prediction market platform violates state laws against illegal gambling.

HOW:

CNN - The CFTC filed an emergency motion to stop New York's enforcement actions, labeling them as an "overreach," and stated that allowing New York to enforce its gambling laws against CFTC-regulated entities could bring federally regulated markets to the brink of destruction.

ESPN - The Commodity Futures Trading Commission filed for a temporary restraining order to halt the state’s lawsuit against Kalshi.

Cointelegraph - The CFTC filed an emergency motion to stop New York's enforcement actions, labeling them as an "overreach."

Cointelegraph - The CFTC wrote in a court filing that allowing New York to enforce its gambling laws against CFTC-regulated entities could bring federally regulated markets to the brink of destruction.

[10:49 AM EDT] - CBS News - The Commodity Futures Trading Commission has filed legal actions against at least nine states, including New York, to block them from regulating the markets.

[10:49 AM EDT] - CBS News - Earlier this week, a federal judge temporarily stopped Minnesota from enforcing its recently enacted law banning most bets on prediction markets, following a lawsuit from the CFTC seeking to halt the law from taking effect in August.

Bloomberg Markets - The CFTC filed an emergency motion to stop New York's enforcement actions, labeling them as an "overreach."

CNN - The CFTC asked the judge overseeing the federal case to issue an order to stop New York from taking any action against prediction markets, claiming it has exclusive jurisdiction.

CNN - The CFTC wrote in a court filing that allowing New York to enforce its gambling laws against CFTC-regulated entities could bring federally regulated markets to the brink of destruction.

CNN - The CFTC claims that allowing New York to enforce its gambling laws against CFTC-regulated entities could bring federally regulated markets to the brink of destruction.

Cointelegraph - The clash is described as a growing conflict between New York and the CFTC regarding the regulation of prediction markets under state gambling laws.

(UPDATED August 1, 2026 10:27 UTC)

A significant lawsuit has been filed against Kalshi, seeking restitution for consumers who placed bets on the platform, along with demands for triple its alleged gains and a hefty $100,000 for each unauthorized sports bet. The lawsuit estimates that Kalshi could face penalties of at least $36 billion, as it is accused of operating without a proper license from the state gaming commission and avoiding tax obligations like other licensed gambling entities. In response, the CFTC has filed an emergency motion to halt New York's enforcement actions, arguing that such actions could jeopardize federally regulated markets.

(UPDATED August 1, 2026 05:54 UTC)

A significant lawsuit has been filed against Kalshi, potentially costing the company an estimated $36 billion in penalties. While the lawsuit does not aim to shut down Kalshi, a successful outcome could severely impact its operations, with requests for heavy monetary penalties, including full restitution to customers and $100,000 for each attempt to offer unlicensed sports wagering. In response, the Commodity Futures Trading Commission has sought a temporary restraining order to pause the state’s lawsuit against Kalshi.

(UPDATED July 31, 2026 20:21 UTC)

A new lawsuit has been filed against Kalshi, seeking to compel the platform to pay restitution to consumers, forfeit its profits, and face fines that could total up to $36 billion for allegedly violating state laws on gambling. The lawsuit claims that Kalshi exposes New York residents to financial risks and allows individuals under the legal gambling age of 21 to use its services. In response, the CFTC has filed an emergency motion to halt New York's enforcement actions, arguing that they constitute an overreach.

(UPDATED July 31, 2026 19:23 UTC)

A significant lawsuit has been filed against Kalshi, seeking a court order for the company to submit to state regulators and taxes, with potential penalties estimated at a staggering $36 billion. The suit alleges that Kalshi has not only failed to obtain the necessary license from the state Gaming Commission but also evaded tax obligations that licensed casinos and mobile sports gambling platforms must adhere to. Additionally, the lawsuit claims that Kalshi's prediction market operates as a gambling operation in disguise, demanding the forfeiture of illegal profits and restitution for harmed consumers.

(UPDATED July 31, 2026 18:23 UTC)

A significant lawsuit has been filed against Kalshi, aiming to halt its operations in New York and seeking restitution for consumers, forfeiture of profits, and fines that could total three times its earnings in the state. The lawsuit alleges that Kalshi has been offering illegal gambling products without the necessary state license, adding to a growing conflict between New York and the CFTC over the regulation of prediction markets. In response, the CFTC has submitted an emergency motion to stop New York's enforcement actions, arguing that such moves could threaten the viability of federally regulated markets.

(UPDATED July 31, 2026 17:23 UTC)

Kalshi is facing a lawsuit that could result in an estimated $36 billion in penalties for allegedly violating state laws regarding wagering on games involving New York college teams and sports betting for individuals under 21. Governor Kathy Hochul has emphasized that Kalshi has chosen to disregard New York’s gambling laws, which are designed to protect consumers and ensure fair play among companies. The governor highlighted that these regulations are crucial for preventing problematic gambling and providing funding for essential public services.

(UPDATED July 31, 2026 16:29 UTC)

A lawsuit has been filed against Kalshi, seeking to halt its operations in New York and demanding restitution for consumers who placed bets on the platform, along with fines that could amount to three times its profits in the state. New York Governor Kathy Hochul has accused Kalshi of disregarding the state's gaming laws, highlighting concerns that the platform exposes residents to financial and personal risks, especially since it allows users under the legal gambling age of 21. Additionally, the Commodity Futures Trading Commission is taking legal action against at least nine states, including New York, to prevent them from regulating these markets.

(UPDATED July 31, 2026 15:40 UTC)

A lawsuit has been filed to stop Kalshi's operations in New York, demanding restitution for consumers who placed bets on the platform, forfeiture of its profits, and fines totaling three times its earnings in the state. Meanwhile, the global trading volume on Kalshi, Polymarket, and similar platforms has surged dramatically, jumping from less than $5 billion in September 2025 to approximately $24 billion as of April 2026, according to the Pew Research Center. Additionally, Americans are now wagering an average of $14 billion each month on legal sports betting sites, highlighting the growing popularity of these platforms.

(UPDATED July 31, 2026 14:44 UTC)

Attorney General Letitia James has declared that prediction markets like Kalshi are essentially gambling platforms, regardless of how they may be labeled. This statement comes as a lawsuit intensifies the ongoing conflict between New York and the CFTC regarding the applicability of state gambling laws to federally regulated prediction markets. Meanwhile, a federal appeals court has rejected Kalshi's request to pause a lower court's ruling, which allows New York to proceed with its lawsuit, while the CFTC has filed an emergency motion to halt New York's enforcement actions, calling them an "overreach."

(UPDATED July 31, 2026 13:31 UTC)

A new lawsuit has emerged as a significant legal challenge for the prediction markets industry, which has previously enjoyed support from Trump. This latest case, initiated by a state attorney general against Kalshi, adds to a growing list of legal actions, including previous lawsuits from states like Rhode Island and New York targeting various operators for alleged unlawful betting practices. Meanwhile, while some states like Nevada and Michigan have successfully curtailed Kalshi's operations, a federal judge recently blocked Minnesota's ban on prediction markets, highlighting the ongoing legal battles surrounding this controversial sector.

(UPDATED July 31, 2026 12:35 UTC)

New York has filed a lawsuit against Kalshi Inc.’s trading subsidiary, alleging that it operates an illegal, unlicensed gambling operation within the state. The lawsuit claims that Kalshi's prediction market allows users under the legal age to engage in mobile sports betting, and it comes after a federal appeals court denied Kalshi’s request to pause a lower court’s ruling, paving the way for this legal action. Meanwhile, the CFTC is seeking a court order to prevent New York from enforcing its gambling laws against prediction markets, arguing that such enforcement could jeopardize federally regulated markets.

(UPDATED July 31, 2026 11:45 UTC)

Attorney General Letitia James is leading a lawsuit against Kalshi, seeking an order to halt its operations along with fines, restitution, and the forfeiture of profits. The lawsuit alleges that Kalshi failed to obtain a state gambling license and pay the related taxes, with James emphasizing that New York's gambling laws are designed to protect children from underage betting and combat gambling addiction. Meanwhile, the CFTC warns that allowing New York to enforce its gambling laws against federally regulated entities could jeopardize the stability of those markets.

(UPDATED July 31, 2026 10:56 UTC)

New York has filed a lawsuit against Kalshi, alleging that the company's prediction market platform violates state laws against illegal gambling. The Commodity Futures Trading Commission, or CFTC, is also involved in the legal proceedings, having filed an emergency motion to halt New York's enforcement actions, which they describe as an "overreach." This situation highlights a growing conflict between New York and the CFTC over the regulation of prediction markets under state gambling laws.