New York Sues Kalshi Over Illegal Gambling Claims, Seeking $36 Billion

New York State has filed a lawsuit against prediction market platform Kalshi, accusing it of running an illegal gambling operation and seeking at least $36 billion in damages.

Attorney General Alleges Unlicensed Gambling

New York Attorney General Letitia James filed the suit on Friday, seeking a court order to bar Kalshi from operating in the state along with fines and restitution for users. The lawsuit claims Kalshi lets users bet on sports, culture and elections without a license from the New York State Gaming Commission, exposing residents, including those under the state’s legal gambling age of 21, to serious financial risk. The state also alleges Kalshi avoided paying associated taxes.

Damages Could Reach $36 Billion

Alongside the lawsuit, New York filed for a temporary restraining order to halt Kalshi’s relevant contracts in the state, along with a request for full restitution, disgorgement of proceeds, and penalties equal to three times its gains plus $100,000 per offering. Court filings put potential compensatory damages at a minimum of $36 billion, pending a full accounting. Governor Kathy Hochul said Kalshi has ignored gaming laws meant to protect consumers, while James argued prediction markets are gambling platforms regardless of branding.

Legal Battles Escalate Across States

The CFTC filed its own motion Thursday seeking to block New York from pursuing action against Kalshi and other CFTC-registered platforms, continuing its push to keep sole jurisdiction over event contracts.

Kalshi has also faced setbacks in Michigan and Washington, though Minnesota recently blocked its own ban from taking effect. Attorney Daniel Wallach noted New York’s broad civil remedies could allow nationwide disgorgement, suggesting the $36 billion figure may even be conservative. Kalshi remains the largest prediction market platform globally, with June volume reaching $33 billion.