- The petition asks a judge to bar Kalshi from operating in New York unlicensed and impose three times its gains.
- New York also seeks $100,000 for each unauthorized sports wagering offer, a penalty that does not reach election contracts.
- The filing cites Kalshi markets on the NY-13 Democratic primary and on which party wins the U.S. Senate.
- Kalshi has reported a $22 billion valuation and $178 billion in annualized transaction volume, and holds no New York license.
NEW YORK – New York sued prediction market operator KalshiEX LLC on Friday for running an unlicensed gambling business in the state. The petition charges Kalshi’s election markets under the New York Constitution, not only its sports contracts.
New York Charges The Election Markets Under Its Constitution
The state’s own cease-and-desist demand to Kalshi last October reached only the sports wagering side of the platform. The petition carries sports wagering counts as well, but its first cause of action rests on Article I, Section 9 of the state constitution, which bans “pool-selling, book-making, or any other kind of gambling” outside the exceptions the article lists. That count sweeps in every contract on the platform, not only the ones tied to a game.
The petition’s political examples are the questions that drive the US election odds tracker: which party will win the U.S. Senate, and who takes a single House primary.
It records that on June 17, 2026, at about 2 p.m., a bettor could take “Yes” positions on any of eight candidates in a market titled “NY-13 Democratic Nominee,” each contract paying $1 if that candidate won the primary. The New York primary results came in the following week.
The distinction matters for what the state can collect. The $100,000-per-offer penalty runs from Section 1367(16)(a) of the Racing, Pari-Mutuel Wagering and Breeding Law, which reaches only unauthorized sports wagering and mobile sports wagering. The election and culture markets carry no such per-offer figure. They sit inside the injunction the state is seeking and inside the treble penalty it asks for under Penal Law Section 80.10.
What The Petition Demands
The verified petition, brought in Supreme Court, New York County under Executive Law Section 63(12), asks for a permanent injunction against operating a gambling business in New York without a Gaming Commission license. It also seeks an accounting of all bets placed and all money customers lost, restitution, disgorgement, damages, the treble penalty, the $100,000-per-offer sports penalty and $2,000 in costs under CPLR Section 8303(a)(6).
In announced the case, Attorney General Letitia James said that “no matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple.” Gov. Kathy Hochul announced the case alongside her.
Accounts At 18, And Markets On New York College Teams
Two allegations reach conduct that a licensed New York operator could not engage in at all. Kalshi’s member agreement permits accounts for bettors at least 18 years old, while the Racing Law defines a minor as anyone under 21 and bars mobile sports wagering by minors outright.
The platform also carried contracts on games involving New York college teams, which the Racing Law defines as prohibited sports events regardless of where they are played. The petition names the March 19, 2026, basketball game between Siena University and Duke University and the March 20, 2026, game between Hofstra University and the University of Alabama. It says Kalshi promoted the Siena market on X.com.
The Cease-And-Desist, And The Federal Rulings That Followed
The New York State Gaming Commission demanded on Oct. 24, 2025, that Kalshi stop operating, advertising and administering its mobile sports betting platform in the state without a license. Three days later the company sued the commission and its commissioners in the U.S. District Court for the Southern District of New York, seeking to block enforcement of that demand. The commission agreed on Oct. 28 to hold off on enforcement while that request was decided.
That pause ended this month. The district court denied Kalshi’s motion for a preliminary injunction on July 7, corrected the order in part on July 13, and denied an injunction pending appeal on July 27. The state filed its petition four days later. The exchange has drawn scrutiny on other fronts this year, including the insider trading questions announcing the suit faced in May.
The Licensed Market The State Says It Is Protecting
New York runs nine licensed mobile sports wagering operators, taxed at roughly 51% of gross revenue, with the proceeds directed largely to public school funding, youth sports programs and problem gambling treatment. Those operators produced about $2 billion in gross gaming revenue in 2024 and paid more than $1 billion in state taxes.
Kalshi, which has reported a $22 billion valuation and $178 billion in annualized transaction volume, pays none of that and is not licensed by the Gaming Commission in any capacity. Its appeal of the July 7 ruling is docketed in the U.S. Court of Appeals for the Second Circuit as No. 26-1835.
