New York Accuses Kalshi of Operating an ‘Unlawful Betting Scheme’ in Latest Lawsuit
Headquartered in New York, Kalshi faces legal action from various states.
New York has initiated legal proceedings against Kalshi, asserting that the company is operating an “illegal gambling business” by allowing individuals to place bets on its online prediction market. This lawsuit follows several others from different states, including Nevada and Arizona, which also regard Kalshi’s platform as a form of gambling. In contrast, the Commodity Futures Trading Commission (CFTC), the governing body for prediction markets, disagrees with this characterization.
The allegations in the New York lawsuit claim that Kalshi qualifies as a gambling entity because it enables users to bet on uncertain events determined by chance, which are not controlled by the bettors themselves. New York contends that by operating without a license from the State Gaming Commission, failing to pay taxes like other betting establishments, and providing services to individuals under 21, Kalshi has breached state laws.
New York Attorney General Letitia James stated, “Our gambling laws are designed to protect minors from underage betting and to address gambling addiction. Regardless of the label they use, prediction markets such as Kalshi are essentially gambling operations. By disregarding our regulations, Kalshi is running an illegal business that endsangers New Yorkers. We are pursuing legal action to uphold our laws and safeguard the public.”
The state is seeking a court order that compels Kalshi to forfeit its illegal profits, compensate affected consumers, and pay penalties amounting to three times the profits made through its unlawful activities.
Kalshi has been approached for comment regarding the lawsuit but has not yet responded.
Legal history may not favor New York in this case; for example, New Jersey’s attempt to prohibit Kalshi was overturned by a US Circuit Court judge in April 2026. Interestingly, there are connections between the Trump administration, Kalshi, and Polymarket, as Donald Trump Jr. has invested in Polymarket and serves as an advisor to Kalshi. CFTC Chairman Mike Selig has publicly criticized the lawsuit from New York, hinting at ongoing actions to defend prediction markets.
Selig commented, “Rather than pursuing reasoned judicial solutions, Letitia James and New York aim to abruptly shut down prediction markets nationwide. The CFTC has already taken steps to oppose this and will continue to assert its jurisdiction.”
