On Friday, July 31, 2026, New York Governor Kathy Hochul and Attorney General Letitia James announced that the state has filed a lawsuit against KalshiEX, LLC, accusing the prediction market company of operating an unlicensed gambling business in violation of New York law.
According to the lawsuit, Kalshi’s platform allows users to place bets on the outcomes of future events, including sports, elections and cultural happenings. The company launched in 2021 and expanded into sports “trading” in 2025, marketing itself as offering legal sports betting markets available to consumers in all 50 states.
An investigation by the Office of the Attorney General concluded that Kalshi’s offerings amount to gambling under state law because the events users wager on are uncertain, beyond the bettor’s control, or dependent on chance. Despite this, the company has not obtained a license from the New York State Gaming Commission, which the lawsuit says has allowed Kalshi to avoid taxes that licensed casinos and mobile sports betting operators are required to pay. That tax revenue helps fund public schools, youth sports programs and problem gambling treatment services, officials said.
The suit also alleges that Kalshi’s platform is accessible to users between the ages of 18 and 20, despite a New York requirement that mobile sports bettors be at least 21. Officials pointed to research linking underage gambling to psychological distress, financial hardship, and a heightened risk of gambling problems later in life.
“Kalshi has chosen to ignore New York’s gaming laws, which exist to protect consumers, prevent problematic gambling, deliver funding for critical public services, and ensure that every company plays by the same rules,” Hochul said in a statement. “This choice has consequences, and working closely with Attorney General James, New York is taking action to stop this illegal behavior and bring Kalshi into compliance, because no company is above the law.”
James said prediction markets like Kalshi function as gambling platforms regardless of how they are branded. “By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process,” she said. “We are taking them to court to uphold our laws and protect New Yorkers.”
The lawsuit asks a court to bar Kalshi from operating as an unlicensed gambling business in New York, order the company to forfeit its illegal profits, pay restitution to affected users, and impose fines equal to three times the gains obtained through the alleged violations.
The action follows a series of steps New York officials have taken against gambling-related businesses. In October 2025, the state Gaming Commission issued a cease-and-desist demand to Kalshi over its mobile wagering operations. In January 2026, James sued video game developer Valve over allegations it promoted gambling to young players. In April 2026, James sued cryptocurrency platforms Coinbase and Gemini for allegedly running illegal gambling services, and Hochul signed an executive order barring state employees from using prediction markets such as Kalshi for trading.
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