New York AG Files Lawsuit Against Kalshi
Jesse M. Cox Published 03/08/2026
New York Attorney General Letitia James has filed a lawsuit against prediction market site Kalshi, accusing it of running an illegal gambling operation in violation of state law. The lawsuit is seeking a court order stopping Kalshi from operating as an unlicensed gambling business in the state. It is also demanding fines, the forfeiture of illegal gains, and restitution.
Governor Kathy Hochul has joined the action. Kalshi responded with claims of political motivation against New York. Kalshi began offering sports-event contracts in New York. These event contracts are at issue. New York lawmakers insist that they are nothing more than sports betting in disguise.
New York cites Kalshi for offering illegal sports betting
New York's lawsuit alleges that Kalshi’s prediction markets meet the legal definition of gambling. This is so because the outcomes of the events on which its users are betting are uncertain and outside the control of the bettor or hinge on a game of chance.
Despite this, state lawmakers note that Kalshi has failed to obtain a license from the New York State Gaming Commission (NYGC), sidestepping its obligation to pay taxes like licensed casinos and mobile sports gambling platforms do. New York's suit notes that this tax revenue from gambling regulation funds public schools, sports programs for underserved youth, and problem gambling education and treatment. Lawmakers in the Empire State feel that Kalshi should be paying these taxes and contributing to these state-run programs.
“Kalshi has chosen to ignore New York’s gaming laws, which exist to protect consumers, prevent problematic gambling, deliver funding for critical public services, and ensure that every company plays by the same rules,” New York Governor Kathy Hochul said in a statement. “This choice has consequences, and working closely with Attorney General (Letitia) James, New York is taking action to stop this illegal behavior and bring Kalshi into compliance, because no company is above the law.”
The Empire State is also accusing Kalshi of providing underage gambling access
Along with alleging that Kalshi's sports-event contracts violate the state's sports betting laws, New York AG James also notes that, in general, the prediction market site is also skirting state age of majority laws. You need to be at least 21 years old to legally wager on sports in New York. People as young as 18 can play Kalshi's sports event contracts.
“New York’s gambling laws protect children from underage betting and help combat gambling addiction,” said Attorney General James in a statement. “No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple.
"By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process.”
Hochul finds herself in a war of words with an NBA player
Relating to this lawsuit, Governor Hochul found herself under attack on social media from NBA player Kyle Kuzma. On the social media site X, Kuzma claimed that Kalshi had made an offer to New York. It would've funded education and health care in the state.
"Kalshi offered New York a plan that would've brought in $10B over five years for public schools and healthcare," Kuzma noted in his post. "Hochul's response is to ban them to protect the casino lobby. Politicians losing the plot. Makes you wonder what really motivates these politicians."
Kuzma didn't outline the specifics of this alleged Kalshi proposal. He was also omitting another pertinent point. He's an investor in Kalshi.
Hochul was quick to point this fact out on the Governor's press office X site.
"But your motivations are pure, right?" the post read. It was accompanied by a retweet of Kuzma's announcement that he'd invested in Kalshi..