New York Attorney General Sues Kalshi, Demands $36B Over Sports Betting
Regulation & Gov ·
New York's top prosecutor wants Kalshi's prediction market shuttered and hit with damages that start at $36 billion, filed a day after federal regulators tried to preempt exactly this kind of state action.
Attorney General Letitia James petitioned a state court on Friday, casting Kalshi as an unlicensed gambling operation running afoul of eight separate legal counts, according to Decrypt. The filing cites the state constitution's gambling prohibition, bookmaking statutes, unlawful possession of betting records, unlicensed mobile wagering rules and the federal Wire Act, and asks the court to strip Kalshi of triple its earnings while also seeking $100,000 for each instance the platform offered sports wagering. The $36 billion figure is described as a floor, pending a complete accounting of the company's activity.
The timing sets up a direct clash between state and federal authority. The Commodity Futures Trading Commission had already sued New York in April, arguing that federal law gives it exclusive jurisdiction over event contracts, and on Thursday it asked the same court to block New York from pursuing any criminal or civil case against Kalshi or other CFTC-registered platforms. New York filed its petition anyway, one day later, according to The Block.
Investigators built their case partly through test transactions, including four contracts wagering that Connecticut would beat Michigan, costing $1.14 with fees. The petition also flags that Kalshi allows account holders as young as 18 despite New York's wagering age floor of 21, and that it lists markets tied to New York college teams even though licensed sportsbooks in the state are barred from offering those same bets.
Kalshi's litigation record heading into this fight is mixed at best. Courts in Michigan and Washington have already restrained its operations, and New York itself previously denied the company injunctive relief, first at the preliminary stage in July and again when it sought protection pending appeal. Minnesota stands as its lone clear win, where a federal judge concluded many event contracts function as swaps under existing commodities law and blocked the state's ban, though even that ruling flagged sports and pop-culture markets as harder cases — the exact category New York's new petition targets almost exclusively.
What remains unsettled is which authority ultimately prevails when a federal regulator and a state attorney general pursue conflicting mandates over the same platform in the same court system, and whether New York's filing proceeds despite the CFTC's restraining-order request or gets paused pending that ruling.