NY officials allege Kalshi runs illegal operations

By the Editorial Team · Saturday, August 1, 2026

New York officials have sued prediction market platform Kalshi for operating an unlicensed gambling business and are seeking to stop its activities in the state while demanding forfeiture of profits and consumer restitution. The lawsuit highlights ongoing disputes over regulatory authority between state and federal governments amid the growth of prediction markets and concerns over consumer protection.

New York state officials have filed a lawsuit against prediction market platform Kalshi, accusing the company of operating an illegal and unlicensed gambling operation. The legal action, announced Friday by Governor Kathy Hochul and Attorney General Letitia James, seeks to halt Kalshi’s operations within New York and require the firm to forfeit its profits.

The lawsuit, lodged in New York State Supreme Court in Manhattan, alleges that Kalshi’s activities violate state gambling laws. Authorities are also requesting restitution for consumers they say were harmed by the platform and fines amounting to three times Kalshi’s illegal earnings. One point of contention highlighted in the complaint is that Kalshi permits users as young as 18 to participate, whereas New York law mandates a minimum age of 21 for mobile sports betting.

This suit follows similar actions by New York against other prediction market companies, including Coinbase and Gemini, which faced allegations of running unlawful gambling operations in April. The moves by New York and other states form part of an expanding dispute over the regulatory authority of prediction markets that escalated after the federal government sued three states—Arizona, Connecticut, and Illinois—earlier this year to challenge their attempts to regulate the sector.

Kalshi and similar platforms maintain that they are federally licensed and regulated, contending that state governments lack jurisdiction over their operations. Elisabeth Diana, a spokesperson for Kalshi, condemned the lawsuit as “political theater” and warned that shutting down the federally licensed exchange in New York could drive customers to offshore alternatives. Diana emphasized the company’s commitment to New York and its users, stating that New Yorkers value the product Kalshi provides.

The legal conflict underscores broader tensions between federal and state authorities over how to oversee the rapidly expanding and evolving prediction market industry, particularly as it relates to gambling regulations and consumer protections.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.