New York seeks $36bn in damages from Kalshi and block on prediction market
Attorney General Letitia James alleges the platform has been operating as an unlicensed gambling business.
US.- New York has filed a lawsuit against Kalshi seeking at least $36bn in damages and a temporary restraining order to halt the company’s prediction market operations. Attorney General Letitia James alleges the platform has been operating as an unlicensed gambling business, and says the damages are expected to increase once the state’s full accounting of Kalshi’s revenue is completed.
The petition asks the court to award at least three times the company’s earnings, impose restitution and disgorgement, and fine Kalshi $100,000 for every sports wagering offer made in New York. The complaint includes eight counts, including violations of the state’s constitutional gambling ban, bookmaking laws, possession of gambling records, unlicensed mobile sports wagering and the federal Wire Act.
Governor Kathy Hochul has supported the action, saying Kalshi had “chosen to ignore New York’s gaming laws, which exist to protect consumers, prevent problematic gambling, deliver funding for critical public services, and ensure that every company plays by the same rules.” She added that the lawsuit is intended to stop the company’s “illegal behaviour” and bring it into compliance.
According to the filing, state investigators placed test bets on Kalshi, including four contracts on Connecticut to defeat Michigan in April for a total of US$ 1.14, including fees. The petition also alleges the platform allows users as young as 18 to open accounts despite New York’s minimum gambling age of 21 and offers contracts on games involving New York college teams, which licensed sportsbooks are prohibited from accepting.
New York’s petition cites Kalshi’s own reported figures, valuing the company at $22bn with an annualised trading volume of $178bn. It notes that James has recently pursued similar enforcement actions against cryptocurrency firms Coinbase and Gemini under comparable legal theories.
State-federal dispute continues to grow
The lawsuit comes 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 had already sued the state in April, arguing that federal law gives it exclusive authority to regulate event contracts providers.
Kalshi has faced a series of legal setbacks. It failed to secure a preliminary injunction against the New York State Gaming Commission earlier this month and was later denied protection while appealing that decision. Courts have also ruled against the company in Michigan and Washington, while its main victories 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.
