On Friday, July 31st, 2026, the state of New York filed a lawsuit against Kalshi, a prediction market platform, alleging it operates an illegal gambling business in violation of Empire State laws. The lawsuit claims Kalshi is running its operation without a license from the New York State Gaming Commission and is evading related taxes.

The suit also highlights that Kalshi permits users aged 18 and older to participate, which conflicts with New York's law prohibiting sports betting for individuals under 21 years old. The state is seeking a court order to bar Kalshi from operating in New York without proper licensing, demand restitution to affected users, and require forfeiture of any profits gained.

Additionally, New York is requesting that Kalshi pay fines amounting to three times its profits and penalties of $100,000 for each instance of offering or attempting to offer unlicensed sports betting.

New York Attorney General Letitia James stated, “No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple.” Governor of New York emphasized that Kalshi's disregard for gaming laws, which aim to protect consumers and fund public services, has consequences and that the state is taking action to enforce compliance.

However, the lawsuit faces challenges as it was noted that “States can’t just shut down a federally licensed exchange,” a point underscoring potential complications in enforcement. This legal action follows similar suits filed earlier in the year against cryptocurrency firms Coinbase and Gemini, accused of running unlicensed gambling operations through their prediction market sites.

Sources