New York is seeking at least $36 billion in damages in a lawsuit filed against Kalshi in the middle of the night that bills the prediction-market platform as an “illegal gambling operation.”

The suit, filed just after midnight Thursday night in New York state court by governor Kathy Hochul and attorney general Letitia James, includes eight causes of action. The suit claims Kalshi violated the New York State Constitution and the Federal Interstate Wire Act, which prohibits interstate transmission of information that helps in the placing of bets on any sporting event or contest.

New York seeks at least $36 billion in compensatory damages, an amount that would include Kalshi returning money to customers, paying a $100,000 civil penalty for each illegal sports bet offered in New York, and more. Kalshi is headquartered in New York City.

“No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple,” James said in a statement. “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.”

Kalshi took quick action, removing the case to federal court, which it believes could be a more favorable venue than state court. The CFTC—the federal regulator that oversees prediction markets—also moved quickly, asking for an emergency ruling that would stop the AG from pursuing enforcement actions against Kalshi or any other CFTC-registered platform.

“It’s sad to see this type of political theater from the leadership in our own state,” a Kalshi spokesperson said in a statement. “States can’t just shut down a federally licensed exchange. This would also just hurt New Yorkers, who would be driven offshore. We love New York, we love New Yorkers, and New Yorkers love our product.”

The flurry of legal activity comes after New York received a favorable ruling earlier this week in a separate case that had reached an appeals court. There, Kalshi had initially sued New York last October after the state issued a cease-and-desist letter to the company. A Second Circuit judge this week denied Kalshi’s request for a ruling that would prohibit the state from enforcing its gambling laws while the case plays out, which is what led to the new lawsuit that New York has now filed against Kalshi.

New York is just one of many states where similar battles are playing out. Since Kalshi first launched sports event contracts in January 2025, numerous states have sought to enforce their gambling laws while Kalshi and other prediction-market platforms, including Polymarket and Robinhood, have faced an increasing pile of lawsuits from regulators, consumers, and Native American tribes.

The CFTC, which under President Donald Trump has shown support for the prediction-market industry, has itself sued nine states, including New York, over efforts to block sports-event contracts.

Experts expect the issue of sports-event contracts will eventually reach the U.S. Supreme Court, although that’s unlikely to happen until at least next year.

In June, Kalshi cofounder and CEO Tarek Mansour told Front Office Sports he was not concerned about the legal battles. “We feel very confident about the legal analysis,” he said.

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