New York Governor Kathy Hochul and Attorney General Letitia James have announced that the state is suing Kalshi for operating illegal gambling activities.
An investigation by the Office of the Attorney General (OAG) found that Kalshi's prediction market operates as an unlicensed and illegal gambling platform. The lawsuit asks the court to order Kalshi to forfeit all alleged illegal profits, provide restitution to affected consumers and pay civil penalties equal to three times the gains the company earned through its unlawful conduct.
Hochul stated: “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.
“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 argues that Kalshi's prediction markets meet New York's legal definition of gambling because users wager on events with uncertain outcomes that are beyond their control.
The OAG also alleges that Kalshi has failed to obtain a license from the New York State Gaming Commission, allowing the company to avoid the state's licensing and tax requirements.
In addition, the OAG claims that Kalshi's prediction markets are available to users aged 18 to 20, despite New York law requiring individuals to be at least 21 years old to participate in mobile sports betting. The office argues that exposing young adults to online gambling can have harmful financial and mental health consequences.
As scrutiny of prediction markets continues to grow, Netflix has also released a related short documentary exploring the topic from a US market perspective. Global Gaming Insider reviewed the episode, which covers a range of issues including Donald Trump, insider trading, problem gambling and instances of journalists being coerced, among other topics.
Earlier this week, White House aide Gabriel Perez resigned after allegations he used advance knowledge of President Trump's speeches to earn more than $100,000
