On Friday, July 31st, 2026, New York officials filed a lawsuit against prediction market platform Kalshi, calling it an “illegal, unlicensed gambling operation.” The state aims to stop Kalshi's operations and force the company to forfeit its profits.

Attorney General Letitia James, in a petition filed in a Manhattan state court, stated that Kalshi failed to obtain a license from the New York State Gaming Commission to operate its platform. Kalshi allows users to trade based on predicted outcomes of sports, elections, and other events.

James emphasized that such platforms can encourage problem gambling, including among individuals under the age of 21, potentially endangering their financial, emotional, and physical health. She said, “New York’s gambling laws protect children from underage betting and help combat gambling addiction. No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple.”

Kalshi and similar platforms argue they are federally licensed and regulated, asserting that states lack authority over them. Kalshi responded by stating that New York “seeks to place itself in the position of a nationwide derivatives regulator” and that the lawsuit aims to shut down Kalshi nationwide, which they claim would undermine the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC).

This lawsuit places New York among a growing number of states challenging Kalshi and other companies amid a regulatory dispute involving the administration of United States President Donald Trump over who has authority to regulate the burgeoning prediction market sector.

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