New York officials have filed a lawsuit against prediction market platform Kalshi, alleging the company operates an illegal, unlicensed gambling business and seeking to halt its activities while recovering potentially billions of dollars in profits and penalties.
The lawsuit, announced by Governor Kathy Hochul and Attorney General Letitia James, was filed in New York State Supreme Court in Manhattan.
State officials argue Kalshi failed to obtain a license from the New York State Gaming Commission, did not meet state tax obligations, and allowed users aged 18 to 20 to access prediction markets despite New York requiring participants in mobile sports betting to be at least 21.
The attorney general's office estimated damages and related costs at roughly $36 billion.
The case adds to an expanding legal conflict between several U.S. states and prediction market platforms over regulatory authority.
New York contends Kalshi's event contracts meet the legal definition of gambling because users wager on uncertain outcomes beyond their control, including sporting events and other public events.
State officials also argue prediction markets raise concerns over consumer protection, underage betting, and gambling addiction.
James said, "No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple."
Kalshi, which is based in New York, rejected the allegations, describing the lawsuit as "political theater from the leadership in our own state."
The company maintains it operates as a federally regulated exchange where users trade with one another rather than gamble against the platform.
Kalshi argues that the U.S. Commodity Futures Trading Commission has exclusive authority over prediction market transactions and that states cannot regulate or prohibit its operations.
The federal agency has challenged regulatory efforts in multiple states, while New York and others maintain that prediction markets are largely sports betting activities subject to state gambling laws.
The legal dispute has widened through a series of overlapping lawsuits involving Kalshi, Polymarket, and other operators, alongside state and federal court proceedings.
Recent court rulings have produced mixed outcomes, with some states securing restrictions on Kalshi's activities while judges elsewhere have temporarily blocked state efforts to enforce or expand prediction market bans.
The New York lawsuit marks the latest escalation in the broader battle over how prediction markets should be regulated in the United States.