New York Levies Lawsuit Against Kalshi, Seeks $36 Billion For Alleged Illegal Gambling

• New York and its attorney general filed a lawsuit against Kalshi on Friday, July 31
• The state filed the lawsuit against the prediction market operator after courts denied Kalshi emergency relief
• New York is seeking a $36 billion fine against the company for what it claims is illegal gambling

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New York wasted little time in taking the legal fight to Kalshi as it filed a lawsuit against the prediction market company at 12:01 a.m. on Friday, July 31, seeking $36 billion from the company for alleged illegal gambling in the state.

After courts denied Kalshi emergency relief last week, New York Gov. Kathy Hochul (D) and Attorney General Letitia James announced a lawsuit against the company, alleging the platform runs an illegal gambling operation in the Empire State.

“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 released 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.”

Seeking Billions From Kalshi

The state filed its initial lawsuit against Kalshi in New York County Supreme Court. However, the lawsuit was removed to New York federal court after a Kalshi request and has been assigned to U.S. District Court for the Southern District of New York Judge Analisa Torres. Torres denied Kalshi’s initial request for a preliminary injunction in early July.

NEW: The New York Attorney General's blockbuster $36 billion lawsuit vs. Kalshi—which was initially filed in state court but removed to federal court by Kalshi—has been assigned to the same federal judge (Torres) who ruled against Kalshi. Return ticket to state court likely. pic.twitter.com/lIDrjjb0tu

— Daniel Wallach (@WALLACHLEGAL) August 3, 2026

New York filed its lawsuit one minute after midnight on Friday, July 31, the earliest it legally could file a suit against the company, after courts denied Kalshi’s request for an emergency injunction pending appeal.

In the state’s lawsuit, New York is seeking at least $36 billion from the prediction market operator, directing the respondent to pay a penalty of $100,000 for each offer or attempt to offer sports betting or online sports betting in the state without authorization. The suit requires the company to pay the fine, forfeit all gains from its gambling operations in the state, and pay restitution to users.

As a company, Kalshi has a total valuation of $22 billion.

The lawsuit claims Kalshi is offering an illegal gambling operation in the state, as well as providing online sports betting to residents under the age of 21. Event contracts are available for those 18 and over in most states.

“New York’s gambling laws protect children from underage betting and help combat gambling addiction,” James said in a released statement. “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.”

Elisabeth Diana, head of communications for Kalshi, described the lawsuit as “political theater” in a statement to Sports Betting Dime.

“It’s sad to see this type of political theater from the leadership in our own state. States can’t just shut down a federally licensed exchange. This would also hurt New Yorkers, who would be driven offshore. We love New York, we love New Yorkers, and New Yorkers love our product,” she said.

CFTC Sued To Stop State in April

Commodity Futures Trading Commission Chairman (CFTC) Michael Selig responded to the lawsuit on X, reporting the CFTC will continue to defend its regulatory authority over prediction markets in court.

“Rather than seek reasoned answers from the courts, Letitia James and New York seek to force an unprecedented sudden shutdown of prediction markets nationwide. The
@CFTC has already sued to stop this and will continue to defend its jurisdiction.”

Rather than seek reasoned answers from the courts, Letitia James and New York seek to force an unprecedented sudden shutdown of prediction markets nationwide. The @CFTC has already sued to stop this and will continue to defend its jurisdiction.

— Mike Selig (@ChairmanSelig) July 31, 2026

Selig and the CFTC filed a lawsuit against New York in the U.S. District Court for the Southern District of New York in April. The filed lawsuit came in response to state cease-and-desist notices sent to prediction market operators to prohibit sports event contracts from being traded.

“CFTC-registered exchanges have faced an onslaught of state lawsuits seeking to limit Americans’ access to event contracts and undermine the CFTC’s sole regulatory jurisdiction over prediction markets. New York is the latest state to ignore federal law and decades of precedent by seeking to enforce state gambling laws against CFTC-registered exchanges,” Selig said at the time in a release. “As I’ve said before, the CFTC will not allow overzealous state governments to undermine the agency’s longstanding authority over these markets.”

The CFTC joined prediction market company Kalshi in taking action against the state. The company filed its own lawsuit against the state in October 2025, filing against members of the New York State Gaming Commission just two days after the regulatory body sent a cease-and-desist letter to the prediction market company on Friday, Oct. 24.