New York sues Kalshi over unlicensed prediction market

New York Governor Kathy Hochul and Attorney General Letitia James have filed a lawsuit against Kalshi, accusing the prediction market platform of operating as an unlicensed gambling business in the state.

An investigation by the Attorney General's Office determined that Kalshi's offering constitutes illegal gambling without the required authorization. The lawsuit seeks a court order forcing Kalshi to forfeit all profits allegedly obtained through the unlawful activity, pay restitution to affected consumers, and face civil penalties amounting to three times its ill-gotten gains.

Hochul said Kalshi "has chosen to ignore New York's gaming laws," and asserted that "no company is above the law." She described those laws as measures that protect consumers, curb problem gambling, fund essential public services, and ensure all businesses operate under the same rules.

The state's complaint argues that Kalshi's prediction markets meet New York's legal definition of gambling because users wager on events with uncertain outcomes beyond their control. The OAG also claims Kalshi avoided obtaining a license from the New York State Gaming Commission, thereby skirting the state's licensing and tax requirements.

In addition, authorities allege Kalshi has allowed users aged 18 to 20 to participate, despite New York law requiring a minimum age of 21 for mobile sports betting. The OAG contends that exposing young adults to online gambling could lead to harmful financial and mental health consequences.

The lawsuit arrives amid rising scrutiny of prediction markets. Netflix has also released a short documentary on the topic from a US perspective, which Global Gaming Insider reviewed, covering issues including Donald Trump, insider trading, problem gambling, and alleged coercion of journalists.