New York Sues Kalshi and Seeks $36 Billion in Damages

New York sued prediction market operator Kalshi on July 31, asking a Manhattan court to shut the platform down statewide and order at least $36 billion in damages.

Governor Kathy Hochul and Attorney General Letitia James filed the petition in New York Supreme Court under the state's business fraud statute. The figure is a floor pending a full accounting of what New Yorkers wagered and lost, according to multiple reports of the filing. Kalshi's most recently reported valuation is $22 billion.

State Says Kalshi Took Bets From 18-Year-Olds

The attorney general's office alleges Kalshi runs an unlicensed gambling business, because customers stake money on outcomes they do not control. The petition also says the platform served 18- to 20-year-olds, below the state's minimum age of 21 for mobile sports betting.

"No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple."

James said that in the announcement of the suit. The state also seeks forfeiture of Kalshi's gains, restitution to customers, and a penalty equal to three times those gains, plus $100,000 for each unauthorized offer of sports wagering.

Kalshi dismissed the case as "political theater" and said states cannot shut down a federally licensed exchange, Reuters reported.

Federal Regulator Moves to Blunt the State Case

The Commodity Futures Trading Commission (CFTC) registers Kalshi as a derivatives exchange. The agency filed an emergency motion in Manhattan federal court the same day, calling the state's enforcement overreach. It intervened before by ordering Kalshi to honor trades a Michigan court voided.

The petition follows three rulings against the company. U.S. District Judge Analisa Torres held on July 7 that federal commodities law does not displace New York's gambling statutes. She denied Kalshi an injunction pending appeal on July 27, and a Second Circuit judge refused emergency relief on July 29.

Massachusetts, Michigan, Nevada and Washington have won court orders restricting Kalshi. FairGambling covered the Washington injunction when a King County judge granted it in July.

The Second Circuit has referred Kalshi's injunction motion to a three-judge panel, which has not ruled.