New York Attorney General Letitia James has sued prediction market platform Kalshi, accusing the company of operating unlicensed gambling in the state through event contracts tied to sports, elections, and political events.
In a statement from the New York Attorney General’s Office, James said, “No matter what they call themselves, prediction markets like Kalshi are fundamentally gambling.”
New York seeks to stop operations and seize proceeds
The lawsuit asks the court to stop Kalshi’s gambling business in New York, confiscate alleged illegal proceeds, require restitution for users, and impose civil penalties equal to three times those proceeds.
This is not New York’s first move against Kalshi. The New York State Gaming Commission issued a cease-and-desist order to the company in October 2025, after which Kalshi filed a countersuit against regulators in federal court.
In July this year, a judge denied Kalshi’s request for a preliminary injunction. Court filings show that an appeals court later also rejected Kalshi’s bid to pause enforcement while the case moves forward.
CFTC files emergency motion
Before New York filed its lawsuit, the U.S. Commodity Futures Trading Commission filed an emergency motion seeking to block the state’s enforcement action. The CFTC argues that jurisdiction over in-state event contracts falls under exclusive federal authority through the Commodity Exchange Act.
According to the input, the CFTC has taken the same position in at least nine state-level jurisdiction disputes so far. The agency argues that if states are allowed to ban event contracts listed by federally regulated exchanges, the result would be conflicting state rules and weaker consistency in federal commodity futures oversight.
Jurisdiction fight over prediction markets escalates
The New York case adds to a wider fight over how prediction market event contracts should be regulated. The input also notes that Kalshi had previously been formally sued in Nevada, while Wisconsin also filed suit against Kalshi, Polymarket, and Coinbase over alleged illegal sports betting.
Related items cited in the input say the CFTC chair had described Arizona’s criminal case against Kalshi as “completely inappropriate,” arguing that the matter was a jurisdiction dispute rather than a criminal one. The input also says the Trump administration had backed Polymarket and Kalshi, and that the U.S. Department of Justice and the CFTC sued Arizona and two other states, deepening the broader battle over regulatory authority in prediction markets.