New York Attorney General Letitia James has filed a lawsuit against prediction-market platform Kalshi, alleging it operates an illegal gambling operation within the state. The lawsuit, filed in state court, claims Kalshi’s prediction market fits the legal definition of gambling, as users are betting on uncontrollable events in a game of chance.

The Attorney General's office seeks to prohibit Kalshi from operating in New York without a gambling license and to compel the forfeiture of its profits. Governor Kathy Hochul stated that Kalshi has disregarded New York’s gaming laws, which are designed for consumer protection, prevention of problematic gambling, funding public services, and ensuring fair competition.

A Kalshi spokeswoman, Elisabeth Diana, dismissed the lawsuit as "political theater," asserting that states cannot shut down a federally licensed exchange. Kalshi has seen a rise in popularity in the U.S., enabling users to speculate on a variety of outcomes, including sports, major events, and flight cancellations. The platform's operations are now under scrutiny by New York authorities.