New York Attorney General Letitia James filed a $36 billion lawsuit against prediction market Kalshi on Friday, alleging the platform operated an unlicensed gambling operation and violated state age restrictions by allowing users 18 to 20 years old to place bets.
The suit, filed in state Supreme Court in Manhattan on behalf of the State of New York, seeks to shut down Kalshi’s operations in New York and recover penalties that dwarf the $5 million fine Ohio regulators proposed in April for similar alleged violations.
“What Kalshi offers through its Platform is quintessentially gambling: it allows a bettor to stake or risk money upon the outcome of a contest of chance or a future contingent event not under the bettor’s control or influence,” the complaint states. The suit argues that outcomes on Kalshi’s platform depend “to a material degree upon an element of chance, which in fact predominates over any skill of the bettor.”
James framed the action as protecting New Yorkers from harm. “No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple,” she said in a statement. “By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process.”
Age violations and sports betting without a license
The lawsuit highlights two core allegations. First, that Kalshi offered sports betting in New York without the required state license. Second, that the platform’s availability to users aged 18 to 20 violates New York law, which requires bettors to be at least 21 years old.
“Exposing young people to online gambling can have damaging effects on their mental and financial well-being,” the attorney general’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.”
A state investigation found that Kalshi, which is headquartered in New York, “persistently advertised sports betting on its platform since at least January 23, 2025.” That date came three days after Donald Trump began his second presidential term, during which he reversed federal regulatory action against prediction markets, and two weeks before the Super Bowl.
$36 billion penalty and lost tax revenue
The $36 billion figure breaks down into several components: restitution to users who placed trades on the platform, a $100,000 penalty for each attempt to offer sports wagering, and another penalty three times the amount Kalshi allegedly gained while operating in violation of New York law.
By operating outside New York’s regulatory framework, Kalshi has avoided paying state taxes despite a reported valuation of $22 billion. The suit notes that regulated sports betting operators paid $1 billion in taxes to New York in 2024 alone.
“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,” Governor Kathy Hochul said in a statement. “This choice has consequences.”
Federal court fight and Kalshi’s response
The suit arrived one day after the U.S. District Court for the Southern District of New York denied Kalshi’s request for an injunction in a case challenging the New York State Gaming Commission’s authority to enforce a cease-and-desist order originally sent in October 2025. Kalshi lost that case on July 7 and had sought to block enforcement pending appeal.
A Kalshi spokesperson pushed back against the lawsuit in a statement to CNBC. “States can’t just shut down a federally licensed exchange,” the spokesperson said. “We love New York, we love New Yorkers, and New Yorkers love our product.”
The operator moved to remand the case to federal court on Friday, a move New York is expected to challenge.
This article reports on allegations and legal proceedings as described by the cited source. Any charges or accusations mentioned are unproven, and all individuals are presumed innocent unless and until found guilty in a court of law.
Key questions answered
Why is New York seeking such a large penalty amount of $36 billion from Kalshi?
The penalty includes restitution to users who placed trades, a $100,000 fine for each attempt to offer sports wagering, and another penalty three times the amount Kalshi gained while operating in violation of New York law.
What specific violations is Kalshi accused of in New York?
Kalshi is accused of operating an unlicensed gambling operation, offering sports betting without a required state license, and allowing users aged 18 to 20 to place bets when New York law requires bettors to be at least 21.
How much did regulated sports betting operators pay in taxes to New York in 2024?
Regulated sports betting operators paid $1 billion in taxes to New York in 2024.
When did Kalshi allegedly start advertising sports betting on its platform?
According to the state investigation, Kalshi persistently advertised sports betting on its platform since at least January 23, 2025.