The state of New York on Friday announced it was suing online prediction market Kalshi for operating as “an illegal gambling operation.”

In a complaint filed with the New York State Supreme Court, New York Attorney General Letitia James alleged that Kalshi was running an unlicensed gambling business “in flagrant disregard” of the Empire State’s “constitution, penal laws, and other statutes.”

The complaint notes that, among other things, Kalshi allows users as young as 18 years old to place bets on its platform, while New York state law limits legalized gambling to persons aged 21 or older.

“New York’s gambling laws protect children from underage betting and help combat gambling addiction,” said James in her announcement of the lawsuit. “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. We are taking them to court to uphold our laws and protect New Yorkers.”

James’ lawsuit asks the court to permanently bar Kalshi from operating inside the state unless it obtains a license from the New York State Gaming Commission; ordering it to “produce an accounting of all bets placed, monies lost by customers in connection with its gambling business”; and forcing it to pay assorted “restitution, disgorgement, damages, and penalties” for its assorted violations of the law.

New York Gov. Kathy Hochul, in a statement supporting the lawsuit against Kalshi, accused the company of ignoring state gambling 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.”

Minnesota state Rep. Emma Greenman (D-63B), who earlier this year authored legislation to ban prediction markets in her state, said that teenagers getting hooked on gambling apps is becoming a major problem.

“We’re seeing studies come out that say [the companies] are targeting 18- to 21-year-olds,” said Greenman, “and we are seeing gambling starting younger and younger.”

President Donald Trump’s administration, however, has regularly worked to quash state governments’ efforts to regulate online prediction markets such as Kalshi and Polymarket.

Specifically, the administration has stacked the Commodity Futures Trading Commission (CFTC) with prediction market and sports betting industry insiders who have been pursuing legal action against any states attempting to clamp down on the online gambling platforms.

Earlier this year, CFTC Chair Michael Selig warned states against trying to regulate prediction markets, which he said would “circumvent the clear directive of Congress.”

“Our message to Wisconsin is the same as to New York, Arizona, and others,” said Selig. “If you interfere with the operation of federal law in regulating financial markets, we will sue you.”

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