New York sues Kalshi, seeks $36 billion in penalties

New York state officials filed a lawsuit on Friday, July 31, 2026, seeking to shut down the prediction market platform Kalshi and impose penalties that could exceed $36 billion, alleging the company operates an illegal, unlicensed gambling business. The petition, filed by Attorney General Letitia James in a Manhattan state court, accuses Kalshi of violating state gambling laws by offering event contracts tied to sports, elections, and cultural events without a license from the New York State Gaming Commission.

The lawsuit alleges Kalshi allowed New York residents under the state's legal gambling age of 21 to open accounts and place bets, including on games involving New York college teams, which are prohibited even for licensed operators. State investigators detailed placing test bets, including on a college basketball game. The complaint seeks a temporary restraining order to immediately halt Kalshi's relevant operations in the state, along with restitution for users, disgorgement of all revenue earned, and civil penalties equal to three times the company's gains. Officials estimated the total damages at a minimum of $36 billion, pending a full accounting.