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New York Attorney General sues Kalshi, seeks at least $36 billion

New York Attorney General sues Kalshi, seeks at least $36 billion

New York is pressing for restitution, disgorgement, treble damages and fines as courts, states and the CFTC clash over whether prediction-market contracts are gambling or federally regulated derivatives.

Fact Check
The official NY Attorney General press release directly confirms that Governor Hochul and AG Letitia James sued KalshiEX, LLC for operating an illegal, unlicensed gambling platform through prediction markets involving sports, culture, and elections betting, and that the suit seeks an injunction, fines, forfeiture of illegal gains, and consumer restitution. The specific $36 billion compensatory damages figure is corroborated by The Block's news reporting and by gaming law expert Daniel Wallach, who cited the court filing. All core elements of the claim—the plaintiff (NY AG), defendant (Kalshi), allegations (illegal sports/politics betting), remedies sought (shutdown, refunds/restitution, disgorgement/forfeiture, penalties), and the $36 billion amount—are supported. The only element not stated in the official government source is the exact dollar figure, which is confirmed by multiple credible secondary reports.
Summary

New York Attorney General Letitia James has sued Kalshi, accusing the prediction-market platform of offering unlicensed gambling products in the state through event contracts tied to sports, elections and cultural events without approval from the New York State Gaming Commission. The lawsuit asks the court to halt Kalshi’s operations in New York, require restitution to affected users, disgorgement of revenue, treble damages and additional civil penalties, with compensatory damages estimated in court filings at at least $36 billion pending a full accounting of the company’s business in the state. New York also alleges Kalshi allowed users under the state’s legal gambling age of 21 to access the platform, including users aged 18 to 20, and offered markets involving New York college teams while avoiding taxes tied to gambling operations. After the state filed the case on July 31, Kalshi removed it to the U.S. District Court for the Southern District of New York, and New York Supreme Court Justice Melissa A. Crane treated the state’s request for a preliminary injunction as moot on procedural grounds because the case was no longer before her court. The company argues that New York is trying to regulate a federally supervised derivatives exchange, while the state says the contracts are still gambling under local law. The filing follows an October cease-and-desist order from the New York State Gaming Commission and came after a federal judge denied Kalshi’s bid to block state regulators on July 7 and rejected an injunction pending appeal on July 27. The legal fight has widened beyond New York, with conflicting court decisions in states including Washington and Minnesota and an ongoing dispute over whether event contracts fall under the Commodity Exchange Act or state gambling rules. In a CNBC interview reported by The Block, Kalshi Chief Executive Officer Tarek Mansour said the state’s theory could be "copied and pasted" onto Nasdaq, arguing that Kalshi operates like an exchange that charges a 1% trading fee rather than betting against its users. He also compared the company’s regulatory fight to the early battles faced by Uber and Airbnb, saying disruptive industries often threaten entrenched interests.

Terms & Concepts
  • prediction market: A platform where users trade on the outcome of future events.
  • disgorgement: A legal remedy requiring profits alleged to have been gained unlawfully to be paid back.
  • event contracts: Contracts whose value depends on the result of a specific real-world event, such as a sports game or election.