The lawsuit claims that Kalshi poses a further risk to youth, allowing users between the ages of 18 and 20 to engage with its “prediction market” despite state law setting a minimum gambling age of 21.
New York Gov. Kathy Hochul and state Attorney General Letitia James are leading a lawsuit against Kalshi, accusing the company of running an illegal gambling operation through its online prediction platform.
In a press release, James’s office described Kalshi as a service that originally launched in 2021 as a “prediction market,” letting users bet on the outcome of a wide range of future events. In 2025, the platform launched sports-oriented “trading,” posited as a form of legal gambling available to Americans in all 50 states.
“New York’s gambling laws protect children from underage betting and help combat gambling addiction,” James said. “No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple. By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process. We are taking them to court to uphold our laws and protect New Yorkers.”
In a related statement, Gov. Hochul said that Kalshi’s alleged gambling operation places it squarely in violation of state law.
“Kalshi has chosen to ignore New York’s gaming laws, which exist to protect consumers, prevent problematic gambling, deliver funding for critical public services, and ensure that every company plays by the same rules,” Hochul said in a statement. “This choice has consequences, and working closely with Attorney General James, New York is taking action to stop this illegal behavior and bring Kalshi into compliance, because no company is above the law.”
The lawsuit claims that Kalshi poses a further risk to youth, allowing users between the ages of 18 and 20 to engage with its “prediction market” despite state law setting a minimum gambling age of 21.
“Exposing young people to online gambling can have damaging effects on their mental and financial well-being,” James’s office said. “Recent research has shown that gambling among young people is associated with psychological distress, financial difficulties, and increased risk of gambling-related harms in adulthood.”
Kalshi, in response, has described the lawsuit as a type of “political theater.”
“States can’t just shut down a federally licensed exchange,” Kalshi said in a statement. “This would also just hurt New Yorkers, who would be driven offshore. We love New York, we love New Yorkers, and New Yorkers love our product.”
James, notes ESPN, is asking the court to permanently prohibit Kalshi from operating anywhere in New York—the same state where Kalshi is currently headquartered—unless and until it applies for and receives a gambling license.
The lawsuit seeks heavy penalties for repeated violations of state law, amounting to an estimated $36 billion. This would include full restitution for Kalshi’s New York-based customers, along with other damages.
Sources
New York sues Kalshi for alleged ‘illegal gambling operation’
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