Kalshi sued by New York over alleged illegal gambling

New York Attorney General Letitia James sued prediction market platform Kalshi on Friday, accusing it of running an illegal gambling platform that exposes New Yorkers to “serious personal and financial risk.”

James said New York’s gambling laws protect children from underage betting and help fight gambling addiction. She said prediction markets such as Kalshi are gambling platforms “plain and simple.”

The lawsuit asks the court to order Kalshi to halt its operation, make restitution to customers, forfeit all illegal gains and pay fines equal to triple those gains.

New York Governor Kathy Hochul said Kalshi had chosen to ignore the state’s gaming laws. Kalshi representative Elisabeth Diana said the lawsuit would hurt New Yorkers by driving them offshore and said states cannot shut down a federally licensed exchange.

Kalshi calls itself a federally regulated “event contracts” exchange rather than a traditional sportsbook. It has argued that its activities are closer to market trading than gambling, using event contracts that let people trade on yes-or-no questions.

Kalshi faces similar legal challenges in several US states where gaming regulators have issued cease-and-desist orders or filed suits accusing it of operating an unlicensed gambling business.