New York sues Kalshi for allegedly running an ‘illegal gambling operation’

New York is suing Kalshi over claims the prediction market is running “an illegal gambling operation.” In the lawsuit, New York Attorney General Letitia James accuses Kalshi of violating state laws by accepting wagers without a license from the state’s gaming commission, as reported earlier by CNBC.

An investigation from the Office of the Attorney General (OAG) found Kalshi exposes New York residents “to serious personal and financial risk,” including people under the legal gambling age of 21, the lawsuit alleges. The state asks the court to block Kalshi — which is headquartered in New York — from operating in the state and to pay restitution to customers who placed bets on the platform.

New York joins Nevada, New Mexico, Arizona, Washington, and others in suing Kalshi. Though some states, such as Wisconsin, Illinois, and Rhode Island, have attempted to introduce laws regulating Kalshi and other prediction markets like Polymarket, they have faced pushback from the federal government. The Commodity Futures Trading Commission (CFTC) says it has “exclusive jurisdiction” over prediction markets, but many states argue this authority doesn’t apply to sports wagering.

“It’s sad to see this type of political theater from the leadership in our own state,” Elisabeth Diana, Kalshi’s head of communications, said in an emailed statement to The Verge. “This would also hurt New Yorkers, who would be driven offshore.”

Beyond state gambling laws, Kalshi has also sparked concerns about insider trading. Earlier this month, ABC News reported that President Donald Trump’s teleprompter operator made $100,000 placing bets on Kalshi related to Trump’s speeches.