New York State is demanding at least $36 billion from prediction market platform Kalshi, petitioning a state court to shut the platform down and strip it of three times its earnings.

Attorney General Letitia James filed the petition on Friday alongside a motion for a temporary restraining order, accusing the platform of operating as an unlicensed gambling business across eight counts. Filings put the $36 billion damages figure at a minimum, pending a full accounting.

The charges range from violations of the New York Constitution's gambling ban to bookmaking, possession of gambling records, unlicensed mobile sports wagering, and the federal Wire Act. The state is also seeking $100,000 for every offer of sports wagering, along with restitution and disgorgement.

"Kalshi has chosen to ignore New York's gaming 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," New York Governor Kathy Hochul said in a statement, adding that the state was taking action to stop its "illegal behaviour" and bring the firm into compliance.

Investigators placed test bets on the platform, including four contracts on Connecticut to beat Michigan in April for $1.14 including fees. The petition notes that Kalshi permits 18-year-olds to open accounts, while New York sets the minimum age at 21. It also offers markets on games involving New York college teams — something even licensed operators are prohibited from offering.

The Commodity Futures Trading Commission had moved a day earlier to block the enforcement action. It sued New York in April to establish that federal law grants it sole authority over event contracts, and on Thursday asked the court in that case for a restraining order preventing the state from pursuing criminal or civil enforcement against Kalshi or any other CFTC-registered platform. New York filed the next day regardless. The dispute tests a foundational boundary in U.S. financial regulation: whether contracts tied to real-world outcomes are derivatives governed by federal commodities law or gambling products that states have regulated for over a century.

Kalshi's Mixed Court Record

Kalshi has faced mostly adverse rulings. It sued the New York State Gaming Commission in the Southern District last October, was denied a preliminary injunction on July 7, and refused protection pending appeal on July 27. A Michigan judge restrained it in June, and King County Superior Court granted Washington a preliminary injunction on July 20.

Its two notable victories came in the Third Circuit, which upheld an injunction against New Jersey in April, and in Minnesota, where a federal judge blocked the state's ban on July 27. The Minnesota ruling hinged on whether event contracts qualify as swaps under the Commodity Exchange Act. Judge Katherine Menendez found that many do, while singling out sports and pop-culture markets as the doubtful cases. New York's petition targets sports almost exclusively.

Federal-State Conflict Over Prediction Markets

New York represents the latest front in a campaign the Trump administration has pursued for months. The CFTC has sued Illinois, Arizona, and Connecticut over their efforts to regulate event contracts, added Wisconsin to the list, and moved against Minnesota within hours of its ban becoming law. The president has backed the agency directly, calling state officials who oppose prediction markets "SCUM."

Kalshi's own figures, cited in the petition, place its valuation at $22 billion and annualized trading volume at $178 billion — meaning the $36 billion damages demand exceeds the company's entire stated worth. Attorney General James sued Coinbase and Gemini in April on a similar legal theory.