New York Attorney General Sues Kalshi Over Prediction Markets, Alleging Illegal Gambling

New York Attorney General Letitia James sued prediction market Kalshi on July 31, 2026, alleging illegal gambling and operating without a state license. The lawsuit seeks to halt Kalshi's operations, which allow users to bet on events like sports and elections. While the U.S. Commodity Futures Trading Commission filed an emergency motion to block New York's enforcement, the state aims to protect consumers from underage betting and gambling addiction.

New York lawsuit against Kalshi

• ▪New York Attorney General Letitia James sued Kalshi on July 31, 2026, in a state court in Manhattan, alleging its prediction market platform violates state laws against illegal gambling.
• ▪The New York lawsuit against Kalshi seeks a halt to the platform's alleged unlawful conduct, forfeiture of illegal gains, civil fines equal to triple those gains, and restitution to customers.

Prediction market popularity surge

• ▪Prediction markets like Kalshi and Polymarket have experienced a surge in popularity since the 2024 U.S. presidential election.
• ▪Prediction markets fared better than pollsters in predicting Republican Donald Trump's victory over Democrat Kamala Harris in the 2024 U.S. presidential election.

Federal-state regulatory jurisdiction conflict

• ▪The U.S. Commodity Futures Trading Commission has claimed exclusive oversight and challenged regulatory activity in at least nine states, including New York.
• ▪The U.S. Commodity Futures Trading Commission filed an emergency motion in Manhattan federal court on July 31, 2026, to stop New York's enforcement activity against Kalshi.

State court enforcement actions

• ▪At least four states, including Massachusetts, Michigan, Nevada, and Washington, have won court orders restricting Kalshi's activities.
• ▪On July 8, 2026, U.S. District Judge Analisa Torres refused to issue an injunction to block New York's gambling enforcement against Kalshi.

Gambling licensing requirements

• ▪New York Attorney General Letitia James stated that Kalshi failed to obtain a New York State Gaming Commission license to operate its prediction platform.
• ▪New York Attorney General Letitia James filed similar petitions in April 2026 against Coinbase Financial Markets and Gemini Titan, alleging their event contracts constitute gambling.

Underage betting prevention

• ▪New York Attorney General Letitia James stated that prediction platforms can encourage problem gambling, including by people under age 21, endangering financial, emotional, and physical health.
• ▪New York's petition objects to Kalshi allowing 18- to 20-year-olds to use its platform, despite a minimum age of 21 under state law for mobile sports betting.

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