New York has filed the most financially aggressive state enforcement action yet against Kalshi, asking a court to stop the prediction market exchange from operating an alleged unlicensed gambling business and listing its claimed damages at no less than $36 billion.
Attorney General Letitia James filed a verified petition in New York County Supreme Court Thursday targeting Kalshi contracts involving sports, elections and cultural events. An accompanying Commercial Division filing lists “$36,000,000,000.00 at minimum pending accounting” as the state’s claim for compensatory damages.
The state is also seeking a temporary restraining order that would immediately require Kalshi to stop offering the targeted event contracts in New York. The document is a proposed order, meaning the restrictions do not take effect unless a judge signs it.
The Commodity Futures Trading Commission (CFTC) and the United States asked a separate federal court to temporarily prohibit New York from bringing or continuing enforcement actions against Kalshi and other CFTC-regulated companies. The competing requests set up a direct confrontation between state and federal authorities over who may regulate event contracts listed on federally regulated exchanges.
New York seeks injunction, restitution and multibillion-dollar recovery
The attorney general’s petition alleges that Kalshi operates an illegal gambling platform from its New York headquarters while allowing customers in the state to trade contracts on sports, political elections and entertainment events.
“Prediction markets like Kalshi are gambling platforms, plain and simple,” James said in a press release announcing the lawsuit. “By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process.”
Gov. Kathy Hochul said Kalshi had chosen to disregard state requirements intended to protect consumers, address problem gambling and generate funding for public services.
“This choice has consequences,” Hochul said. “No company is above the law.”
New York alleges that Kalshi meets the state’s definition of gambling because customers risk money on uncertain events outside their control. The company is not licensed by the New York State Gaming Commission and permits customers as young as 18 to participate, while New York requires mobile sports-wagering customers to be at least 21.
The petition asks the court to require an accounting of money lost by customers and gains received by Kalshi. It also seeks restitution, disgorgement, damages and a penalty equal to three times the company’s alleged gains.
For sports contracts, the attorney general is asking for an additional $100,000 for each offer or attempt to offer unauthorized sports wagering in New York.
The $36 billion figure is described as a minimum amount subject to an accounting, meaning the state has not yet publicly detailed precisely how it reached the figure.
The claim is about 64% larger than Kalshi’s most recent confirmed valuation of $22 billion. The company was also reportedly discussing a new funding round at a valuation of approximately $40 billion.
State seeks immediate restrictions beyond sports
The attorney general did not limit the action to Kalshi’s sports contracts.
The proposed temporary restraining order asks the state court to prevent Kalshi from offering New Yorkers event contracts relating to “sports, culture, elections, and other events.”
That request is broader than the October 2025 cease-and-desist demand that prompted Kalshi’s federal lawsuit against the New York Gaming Commission. The earlier regulatory action principally targeted Kalshi’s sports event contracts.
Kalshi sued after receiving the cease-and-desist letter, arguing that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over contracts listed by federally regulated designated contract markets.
A federal judge rejected Kalshi’s request for a preliminary injunction on July 7, concluding that the exchange had not shown New York’s gambling laws were federally preempted. The district court also denied an injunction pending appeal on July 27.
A single Second Circuit judge then denied Kalshi’s request for temporary administrative relief on July 29. That limited order was not a ruling by the three-judge panel on Kalshi’s broader motion for an injunction pending appeal.
The temporary agreement under which New York had refrained from enforcement expired Wednesday, clearing the way for the attorney general’s state-court filing.
CFTC asks federal court to stop New York
The United States and CFTC sought emergency relief Wednesday in the federal lawsuit they filed against New York in April, asking for a temporary restraining order.
The federal case argues that New York is interfering with the CFTC’s exclusive authority over designated contract markets and futures commission merchants. Although the United States and CFTC already had a preliminary-injunction motion pending, they sought faster relief as the standstill involving Kalshi expired.
They followed the emergency motion with a proposed temporary restraining order filed July 30. The proposed order would prevent New York from “pursuing criminal or civil enforcement actions related to event contracts listed on CFTC-regulated DCMs.”
It would also bar “continued litigation of any pending civil enforcement suits against any CFTC-Designated Contract Markets or Futures Commission Merchants until an order is issued on the pending Motion for Preliminary Injunction.”
The proposed order would therefore reach beyond the newly filed Kalshi case. New York has also brought prediction market enforcement actions against Coinbase and Gemini.
The two cases now present competing emergency requests: New York wants a state judge to immediately restrict Kalshi, while the United States and CFTC want a federal judge to stop New York from pursuing that restriction.
Competing rulings could determine Kalshi’s access to New York
The immediate effect now depends on which court acts first. New York’s lawsuit does not itself shut down Kalshi’s contracts, and the CFTC’s emergency filing does not itself block the state.
A signed state TRO could force Kalshi to restrict contracts in New York while the case proceeds. A federal TRO could instead freeze New York’s enforcement effort until the court resolves the CFTC’s broader jurisdictional challenge.
The stakes are significant for Kalshi. New York is the nation’s fourth most populous state, with roughly 20 million residents, so an order broadly restricting the exchange’s event contracts there could deal a substantial blow to its business.
Update: Kalshi has removed the New York attorney general’s enforcement action to federal court, filing a notice of removal in the U.S. District Court for the Southern District of New York. Gaming attorney Daniel Wallach first highlighted the filing on X. The move is likely to delay any immediate state-court action while New York asks the federal court to send the case back to state court.
More on CFTC
