# New York sues Kalshi over alleged illegal betting operations The state accuses prediction markets of running unlawful gambling businesses. - **Source:** [ReadWrite](https://brifing.si/source/7a996b61-bc09-4e57-8483-78f2ad9dd914) - **Published:** 2026-07-31 - **Topic:** [Finance](https://brifing.si/c/finance) - **Original article:** - **On Brifing:** https://brifing.si/s/23aa936c-c318-420b-b1f3-cec283c75767 ## Core allegations of the lawsuit New York Governor Kathy Hochul and Attorney General Letitia James allege that Kalshi offers contracts based on sports, elections, and other future events in violation of state laws. The lawsuit seeks to permanently block Kalshi's operations in the state, demand restitution of alleged profits, compensate customers, and impose civil penalties up to three times the illegal gains. The legal action highlights New York's strict stance against unlicensed gambling operations. ## Kalshi's business model Kalshi launched its prediction market platform in 2021 and expanded into sports markets in January 2025. The company promoted these offerings as 'legal sports markets accessible to Americans in all 50 states.' However, New York argues that Kalshi allows customers to wager money on future contingent events without holding a state gaming license. Court documents reveal Kalshi has grown into a multibillion-dollar business outside New York's regulatory framework. ## Legal foundations New York claims Kalshi violated multiple state laws including constitutional restrictions on unauthorized gambling, criminal gambling statutes, sports wagering regulations, and the federal Wire Act. The state requests the court to permanently prohibit Kalshi's operations in New York while ordering detailed accounting of customer activity and statutory penalties. The Attorney General's office emphasizes the need for immediate judicial intervention. ## Previous regulatory actions The New York State Gaming Commission ordered Kalshi to cease operations in October 2025. Despite this, the company continued operating after suing the regulator and having its preliminary injunction request denied by a federal judge in July. Investor Protection Bureau Chief Shamiso Maswoswe stated that Kalshi's daily unlicensed operations continue to harm New Yorkers, justifying emergency legal measures. ## Requests for immediate relief New York seeks a temporary restraining order to immediately block Kalshi from offering contracts tied to sports, elections, cultural events without state licenses. The proposed order would prevent under-21 wagering and prohibit platform advertising during litigation. The state additionally demands restitution, disgorgement of profits, and comprehensive accounting of customer wagers and losses to address ongoing violations. ## Prior restrictions for public employees In April, Governor Hochul signed an executive order prohibiting state employees from using confidential government information for prediction market trades. Officials stated this aimed to prevent misuse of nonpublic information on emerging trading platforms and maintain public trust as prediction markets expand. This earlier action demonstrates New York's growing concerns about prediction market integrity. ## Officials' statements Governor Hochul stated: 'Kalshi chose to ignore New York's gaming laws that exist to protect consumers, prevent problematic gambling, fund public services, and ensure fair competition.' Attorney General James added: 'No matter what they call themselves, prediction markets like Kalshi are gambling platforms. By ignoring our laws, Kalshi harms New Yorkers, and we're taking action to stop it.' ## Industry and regulatory implications This lawsuit could set significant precedent regarding the legal status of prediction markets. New York's aggressive stance may prompt other states to take similar actions against such platforms. The case underscores the importance of regulatory compliance for fintech companies while highlighting ongoing tensions between innovative business models and existing gambling legislation in the digital age. ## Sources covering this story - https://readwrite.com/new-york-sues-kalshi-alleging-illegal-prediction-markets-state-gambling-laws/ — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._