NY Sues Kalshi for $36B Over Illegal Gambling Claims

The lawsuit, filed in state court, accuses Kalshi of running unlicensed sports betting operations for years, allowing users under 21 to participate, and exposing consumers to financial harm. James is seeking forfeiture of all illegal gains, restitution for affected consumers, and penalties triple the company's profits.

Kalshi's spokesperson dismissed the suit as 'political theater' and argued the platform is federally licensed by the Commodity Futures Trading Commission, which has exclusive jurisdiction over event contracts. The company warned that New York's action threatens to shut it down nationwide.

A federal appeals court recently rejected Kalshi's request to pause a lower court ruling that allowed New York's gambling laws to apply despite federal oversight. The CFTC has filed an emergency motion to block the state's lawsuit, asserting its authority over regulated event contracts.

New York counters that sports betting, which dominates prediction market activity, falls under state jurisdiction rather than federal commodities regulation. The dispute follows the surge in popularity of platforms like Kalshi and Polymarket, which accurately predicted Donald Trump's 2024 presidential victory when traditional polls did not.