New York AG Seeks $36B From Kalshi Over Illegal Gambling Claims
In brief
- New York AG James filed a petition Friday seeking at least $36 billion from Kalshi
- CFTC requested a court restraining order Thursday barring New York enforcement action
- Petition alleges Kalshi allows 18-year-olds to open accounts where New York requires age 21
- Filing comes one day after CFTC's restraining order request
The enforcement escalation
The CFTC asked a court Thursday for a restraining order barring the state from bringing criminal or civil enforcement against Kalshi or other CFTC-registered platforms. New York filed its petition the next day regardless, escalating a jurisdictional conflict that has played out across multiple states.
Governor Kathy Hochul stated that Kalshi has chosen to ignore New York's gaming laws, which exist to protect consumers, prevent problematic gambling, and maintain market integrity.
The petition alleges specific violations. Kalshi allows 18-year-olds to open accounts where New York requires a minimum age of 21. The platform also offers markets on games involving New York college teams, which even licensed operators are barred from offering. Investigators placed test bets on Connecticut to beat Michigan in April for $1.14 including fees, documenting the accessibility of college sports wagering on the platform.
Federal authority and state pushback
The CFTC sued New York in April to establish that federal law gives it sole authority over event contracts. This legal theory has met resistance in multiple jurisdictions. Kalshi was denied a preliminary injunction by the New York State Gaming Commission on July 7. A Michigan judge restrained Kalshi in June. King County Superior Court granted Washington a preliminary injunction against Kalshi on July 20. The Third Circuit upheld an injunction against New Jersey in April.
Courts haven't uniformly sided with the CFTC. A federal judge in Minnesota blocked the state's ban on Kalshi on July 27, finding that many event contracts count as swaps under the Commodity Exchange Act. The CFTC has intensified enforcement, suing Illinois, Arizona, Connecticut, and Wisconsin over their attempts to police event contracts.
Damages and precedent
The petition seeks $100,000 for every offer of sports wagering, plus restitution and disgorgement. Kalshi's own figures put its valuation at $22 billion and annualized trading volume at $178 billion, figures the state quoted back at the platform in its filing.
This case mirrors New York's approach to crypto broadly. New York Attorney General James sued Coinbase and Gemini in April on a similar theory, arguing the exchanges operate as unlicensed financial services. The Kalshi petition extends that enforcement posture into the prediction market space, asserting state authority over consumer protection and gaming regulation regardless of federal CFTC oversight.
