New York claims Kalshi let 18-year-olds bet when the legal age is 21, and now the state wants $36 billion in damages

New York has filed a massive lawsuit against the prediction market Kalshi, seeking $36 billion in damages and asking the court to shut the platform down entirely. The state filed the 32-page lawsuit in the state Supreme Court in Manhattan shortly after midnight on Thursday, arguing that Kalshi is operating an illegal gambling business.

New York Attorney General Letitia James said in a statement that prediction markets like Kalshi “are gambling platforms, plain and simple.” The lawsuit alleges Kalshi violates the New York State Constitution and the Federal Interstate Wire Act, and beyond the $36 billion request, the state is also seeking consumer repayment and a $100,000 penalty for every illegal sports bet allegedly facilitated in New York.

Age is one of the central issues in the filing. New York claims Kalshi allows users as young as 18 to participate in its markets, even though state law sets the minimum sports betting age at 21, and the state is asking the court to bar Kalshi from operating in New York until it obtains a proper gaming license.

The fight has already moved from state court to federal territory

Kalshi did not wait long to respond after the lawsuit was filed. The company moved to shift the case from state court to federal court, and the Commodity Futures Trading Commission, the federal agency that regulates prediction markets, requested an emergency order to stop New York from taking enforcement action against Kalshi or other CFTC-registered platforms.

A Kalshi spokesperson pushed back on the state’s case, saying “states can’t just shut down a federally licensed exchange.” The company added that such a move would hurt New York residents by pushing them toward offshore platforms instead. Elsewhere in consumer dispute stories drawing attention this week, a Chipotle customer’s bare minimum order sparked its own round of online debate.

This lawsuit fits into a broader pattern of tension between state regulators and the CFTC. Chairman Michael Selig has previously said a state “cannot force a DCM to violate its obligations,” and the commission has already pursued similar actions against several other states attempting to restrict CFTC-registered exchanges. In other online disputes making the rounds this week, a crowd confronting a woman over missing crypto funds also went viral.

The CFTC previously exercised emergency authority on July 14, 2026, to stay a rule change tied to a Michigan court order that would have canceled certain executed Kalshi trades, arguing at the time that undoing completed trades threatened the stability of the wider derivatives market.

For now, Kalshi’s case sits in federal court, with the state and the company on opposing sides of whether prediction markets fall under gambling law or federal derivatives oversight.