New York Kalshi lawsuit seeks at least $36 billion over gambling claims
New York Attorney General Letitia James wants Kalshi shut down in the state and says damages should start at $36 billion.
By Dev Ramirez · Crypto Correspondent
· 3 min read
The new york kalshi lawsuit puts one of the fastest-growing prediction markets in the middle of a high-stakes fight over who gets to regulate bets on real-world events. New York Attorney General Letitia James asked a state court on Friday to stop Kalshi’s operations in the state and seek at least $36 billion, according to the petition filed by her office.
Kalshi runs event contracts, which let users trade on whether a specific outcome will happen. In practice, a customer can buy a contract tied to an election, a sports result or another event, and the payout depends on the answer.
James’ office says Kalshi is operating as an unlicensed gambling business. The petition asks the court to award three times the amount Kalshi has earned, with the damages floor set at $36 billion until a full accounting is completed.
New York also wants $100,000 for each alleged sports-wagering offer, plus restitution and disgorgement. Disgorgement means giving up profits that a court finds were improperly earned.
Why is New York suing Kalshi?
The state’s case centers on sports markets. The attorney general’s petition brings eight counts, citing New York’s constitutional gambling ban, bookmaking laws, possession of gambling records, mobile sports betting rules and the federal Wire Act.
New York investigators said they placed test trades on Kalshi, including four contracts in April tied to Connecticut beating Michigan, with the total cost listed at $1.14 including fees. The petition also says Kalshi allows users as young as 18 to open accounts, while New York sets the minimum age for sports betting at 21.
The filing further alleges Kalshi offered markets involving New York college teams. New York says even licensed sports betting companies are barred from taking wagers on those games.
Gov. Kathy Hochul said in a statement that Kalshi had ignored state gaming laws designed to protect consumers, address problem gambling, fund public services and require companies to follow the same rules.
How the CFTC fight changes the stakes
Kalshi’s defense sits inside a broader federal-state clash. The Commodity Futures Trading Commission sued New York in April, arguing federal law gives the agency exclusive authority over event contracts. On Thursday, the CFTC asked a court to block New York from bringing civil or criminal enforcement against Kalshi or other CFTC-registered platforms.
New York filed its petition the next day anyway.
Kalshi has faced mixed results in courts around the country. In New York, the company sued the New York State Gaming Commission last October but was denied a preliminary injunction on July 7 and then denied protection pending appeal on July 27. Courts in Michigan and Washington have also restricted Kalshi, according to rulings cited in the case record.
The company has had some wins. The Third Circuit upheld an injunction against New Jersey in April, and a federal judge in Minnesota blocked that state’s ban on July 27.
The Minnesota ruling focused on whether event contracts qualify as swaps under the Commodity Exchange Act. Judge Katherine Menendez found many of them do, while treating sports and pop-culture contracts as more uncertain. New York’s petition focuses mostly on sports, which keeps that unresolved line at the center of the dispute.
The numbers around Kalshi show why regulators are pushing hard. New York’s petition cites Kalshi’s own figures putting its valuation at $22 billion and annualized trading volume at $178 billion. James’ office also sued Coinbase and Gemini in April under a similar legal theory.
This story draws on original reporting from Decrypt.
