New York seeks at least $36bn from Kalshi and asks court to shut down prediction market operations

New York has filed a lawsuit against Kalshi seeking at least $36bn in damages and a temporary restraining order to stop its prediction market business. For PSPs and other payment providers in high-risk verticals, the case is a clean reminder that event-contract platforms can end up in the same enforcement bucket as unlicensed gambling.

1. Attorney General Letitia James says Kalshi has been operating as an unlicensed gambling business. The petition asks the court to award at least three times the company’s earnings, order restitution and disgorgement, and fine Kalshi $100,000 for every sports wagering offer made in New York.
2. The complaint includes eight counts: violations of the state’s constitutional gambling ban, bookmaking laws, possession of gambling records, unlicensed mobile sports wagering, and the federal Wire Act. Governor Kathy Hochul backed the action, saying Kalshi had “chosen to ignore New York’s gaming laws” and that the lawsuit is meant to stop its “illegal behaviour” and bring it into compliance.
3. State investigators say they placed test bets on Kalshi, including four contracts on Connecticut to defeat Michigan in April for a total of US$ 1.14, including fees. The filing also says the platform lets users as young as 18 open accounts even though New York’s minimum gambling age is 21, and that it offers contracts on games involving New York college teams, which licensed sportsbooks are not allowed to accept.
4. New York’s petition cites Kalshi’s own reported figures, putting the company at $22bn in value with annualised trading volume of $178bn. It also notes that James has recently taken similar enforcement actions against cryptocurrency firms Coinbase and Gemini under comparable legal theories.
5. The state’s lawsuit landed one day after the CFTC asked a federal court to block New York from taking civil or criminal enforcement action against Kalshi or any other CFTC-registered event contracts platform. The agency already sued the state in April, arguing that federal law gives it exclusive authority to regulate event contracts providers.

Kalshi has already hit several legal walls: it failed to win a preliminary injunction against the New York State Gaming Commission earlier this month, was later denied protection while appealing that decision, and has also lost in Michigan and Washington. Its main wins so far have come in New Jersey, where the Third Circuit upheld an injunction against state enforcement, and in Minnesota, where a federal judge temporarily blocked the state’s ban.