New York's state attorney general filed a lawsuit on Friday against KalshiEX, LLC in Manhattan state court, alleging the company ran an illegal, unlicensed gambling enterprise through its prediction-market platform. Attorney General Letitia James said the suit requests a court order to stop Kalshi from operating as an unlicensed gambling business and to force the company to surrender profits, pay fines and provide restitution to affected users.
The complaint contends that Kalshi's prediction markets qualify as gambling under New York law because the events users wager on have uncertain outcomes that are outside the bettors' control or otherwise depend on chance. According to the filing, Kalshi began operations in 2021 as a platform enabling users to place money on the outcomes of a broad array of future events. In 2025 the company introduced sports "trading," promoting it as offering lawful sports betting markets available to users across all 50 states.
New York's suit alleges that Kalshi did not secure a license from the New York State Gaming Commission and, as a result, avoided paying taxes imposed on licensed casinos and regulated mobile sports gambling platforms. The complaint notes that tax revenue from regulated gambling is used to support public schools, youth sports programs in underserved communities and problem-gambling education and treatment.
The attorney general further alleges that Kalshi's markets were accessible to people aged 18 to 20, even though New York law sets the minimum age for mobile sports wagering at 21. The suit asserts that offering prediction markets to those below the legal gambling age exposes New Yorkers, including underage users, to significant personal and financial risk.
As remedies, the lawsuit asks the court to order Kalshi to forfeit any illegal gains, distribute restitution to consumers who suffered harm and pay civil penalties equal to three times the gains the company obtained through the conduct alleged in the complaint. The filing also references an earlier enforcement step: in October 2025 the New York State Gaming Commission demanded that Kalshi stop operating its unlicensed mobile sports wagering platform.
The complaint seeks judicial relief to halt the company's unlicensed operations in New York and to recover funds for the state and consumers. The scope of the lawsuit centers on licensing, tax obligations associated with regulated gambling and the allegation that Kalshi's platform permitted underage participation.