New York’s attorney general has sued prediction market operator Kalshi, accusing the platform of running an illegal, unlicensed gambling business by offering tradable event contracts on sports, elections and other outcomes.
The state’s complaint asks a court to halt Kalshi’s activities in New York, force the company to forfeit alleged ill-gotten gains, require restitution to affected users and impose civil penalties equal to three times those gains.
“No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple,” Attorney General Letitia James said in announcing the suit, adding that the action is intended to enforce state law and protect New Yorkers.
The lawsuit follows a cease-and-desist order the New York State Gaming Commission issued to Kalshi in October 2025. Kalshi sued the regulator in federal court; a judge denied the company’s request for a preliminary injunction in July, and an appeals court later rejected a bid to block enforcement while the appeal proceeds. Kalshi did not immediately comment on the latest filing.
The case intensifies an ongoing jurisdictional clash between state authorities and the Commodity Futures Trading Commission (CFTC). Just before New York filed its complaint, the CFTC filed an emergency motion seeking to prevent the state from enforcing its actions, arguing that the agency has exclusive authority under the Commodity Exchange Act to regulate designated contract markets such as Kalshi. The CFTC has made similar arguments in disputes with multiple states, warning that permitting state bans on contracts listed by federally regulated exchanges would create conflicting rules and undercut federal oversight.
Prediction markets let users buy and sell contracts tied to future events; contract prices reflect the market’s assessment of the probability an event will occur. Several platforms in the sector have drawn regulatory scrutiny. Kalshi’s rival Polymarket has faced investigations and restrictions in various jurisdictions over questions of gambling classification and licensing.
Kalshi expanded into blockchain-based offerings in December 2025, launching tokenized prediction markets on Solana and later adding support for additional chains. The broader category of on-chain prediction markets has seen significant activity around major events: analytics firm Chainalysis reported roughly $20 billion in trading volume on blockchain-based prediction markets tied to the 2026 FIFA World Cup, with more than 400,000 wallets participating.
The lawsuit highlights the uncertain regulatory landscape for prediction markets, where federal commodity regulators and state gambling authorities each assert overlapping claims. The outcome of New York’s case, and related litigation and motions involving the CFTC, could shape whether and how event-contract platforms operate across the United States.
This article was prepared in line with journalistic standards and aims to provide an accurate summary of ongoing legal developments. Readers should consult the original filings and official statements for full details.