New York sues Kalshi over alleged unlicensed betting operation

New York has filed suit against Kalshi, the prediction markets platform co-founded by Brazilian entrepreneur Luana Lopes Lara, accusing it of running an illegal betting scheme without a state license. For high-risk payments teams, the point is simple: if a product walks and talks like gambling under state law, the licensing and tax questions show up very quickly.

1. The lawsuit was filed on Friday (31/7) in a Manhattan state court by New York Attorney General Letitia James. Bloomberg reported that James said the platform exposes New York residents, including minors under 21, to “serious personal and financial risks.”
2. New York says Kalshi did not apply for a license from the New York State Gaming Commission and did not collect taxes in the same way as licensed casinos and mobile sports betting platforms. The state argues that Kalshi’s markets fit the legal definition of gambling because the outcome of the wagered events is uncertain and outside the user’s control.
3. Governor Kathy Hochul, in a joint statement with James, said Kalshi “chose to ignore New York’s gaming laws,” which exist to protect consumers, prevent problem gambling, provide funding for essential public services, and ensure all businesses play by the same rules.
4. Kalshi rejected the allegations. Spokeswoman Elisabeth Diana called the case “political theater” by the state’s own leadership and said “states cannot simply shut down an exchange licensed by the federal government.” She also said the move would push New Yorkers toward offshore platforms.
5. The case lands in the middle of a broader legal fight over prediction markets. In early July 2026, a New York judge ruled that the company could not stop state gaming authorities from regulating its sports prediction markets in the same way as sports books. Also in July, a federal judge temporarily blocked Minnesota’s first-in-the-U.S. law banning prediction markets, in a ruling favorable to Kalshi, Polymarket, and the CFTC.

Kalshi was co-founded by Luana Lopes Lara, a former Bolshoi ballet dancer and MIT graduate. In 2026, she joined Forbes as the youngest self-made billionaire. Kalshi’s main competitor is Polymarket.