Times Union18%
New York sues Kalshi, demanding it cease sports 'contracts' 27%
By Alexander MacDougall35%
7/30/2026, 2:01:19 PM
BS Summary: This article contains 31 faulty reasoning types, including Availability Heuristic, Post Hoc (False Cause), and Begging the Question, with Negativity Bias as the most egregious example at 17.6% saturation with 203 hits. Analysis detected 1,840 faulty-reasoning hits from 1,152 analyzed words, generating a BS Score of 34.5% and a BS Rank of 27% (17,613 of 23,846 articles). This article is better (less manipulative) than 73.90% of the article peer group.
ALBANY — A lawsuit was filed by the state attorney general’s office filed early Friday that seeks to halt sports wagering on Kalshi, one of the leading prediction markets — platforms that many regulators claim are nothing more than illegal gambling sites.
State Attorney General Letitia James and Gov.
Kathy Hochul announced in a news release sent around midnight that the state was suing Kalshi, which, along with similar companies, has generated billions in revenue over the past few years.
The civil action claims Kalshi’s sports-related “event contracts” are unlicensed, illegal gambling platforms.
Other states have taken legal action against Kalshi, but New York is the most populous state to do so, and one with laws that could force Kalshi to return its profits to customers nationwide if the government prevails.
“No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple,” James said in a statement announcing the lawsuit.
“By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process.”
The lawsuit comes after a week of legal defeats for Kalshi in U.S.
District Court as it attempted to stave off the state’s efforts to curtail its business.
A federal judge in Manhattan on Monday denied the company’s request for an emergency injunction after the state Gaming Commission sent the company a cease-and-desist letter in October.
And on Wednesday, a judge with the 2nd U.S.
Circuit Court of Appeals also denied a motion for a separate but similar injunction sought by the prediction market company.
The appellate denial gave the state attorney general’s office the legal pathway to pursue its lawsuit.
“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,” Hochul said in a statement.
“This choice has consequences, and working closely with Attorney General James, New York is taking action to stop this illegal behavior and bring Kalshi into compliance, because no company is above the law.”
Kalshi and other prediction markets have exploded in popularity as they offer users the ability to buy “event contracts” on anything from sporting events to the weather to what words President Donald J.
Trump will say in a speech.
Kalshi and other prediction markets have long argued that their event contracts are not betting but rather financial derivatives similar to futures contracts regulated by the federal Commodity Futures Trading Commission, not state gambling authorities.
Under the Trump administration, the federal commission under Chairman Michael Selig has taken a hands-off approach to how prediction markets operate, allowing the companies to expand into categories including sports and politics.
That has not sat well with many states, which see the event contracts, particularly those relating to sports games, as virtually indistinguishable from gambling.
States such as Massachusetts and Nevada have already been successful in blocking the use of sports-related event contracts on Kalshi.
But a successful lawsuit by New York, where Kalshi is headquartered, could do significantly more damage to the company than merely blocking its sports contracts in the state.
Under New York Executive Law, companies headquartered in the state can be required to pay restitution to their customers for illegal profits nationwide if it’s determined a company violated statutes or regulations.
Legal precedent would also allow company executives, such as Kalshi founders Tarek Mansour and Luana Lopes Lara, to be held personally liable for any violations.
In announcing the lawsuit against Kalshi, the attorney general’s office said it would be asking the court to order Kalshi to forfeit all illegal gains, distribute restitution to consumers who were harmed, and pay fines equal to three times the gains the company made through its allegedly illegal actions.
Two assistant attorneys leading the case for the state, K.
Brent Tomer and Alejandra de Urioste, are both former lawyers for the Commodity Futures Trading Commission.
The state previously filed lawsuits against the cryptocurrency companies Coinbase and Gemini for offering prediction markets on their platforms, using the same arguments that those operations constituted illegal gambling.
But the state agreed to refrain from pursuing legal action against Kalshi until at least July 30, pending the result of Kalshi’s injunction request during its appeal in the Second Circuit.
Daniel Wallach, an attorney specializing in gaming and sports betting regulations, said James could have potentially held off on a decision to pursue legal action even longer, until the final ruling in Kalshi’s appeal.
But the attorney general, he added, may not have wanted to wait it out, given that Kalshi’s federal lawsuit against the Gaming Commission took eight months to get to the recent ruling.
“It was an inordinately long period of time to wait for a pretrial ruling on an injunction motion,” Wallach said.
“Having waited that long, it strikes me as unlikely that her office, which includes former (Commodity Futures Trading Commission) attorneys working on this case, would stand down.”
Kalshi did not immediately respond to requests for comment regarding the state’s lawsuit.
Wallach also said the state could move quickly to seek an injunction to get Kalshi to stop offering sports contracts in New York while officials seek to force the company to disgorge earnings that could run into billions of dollars.
An injunction could come only a few weeks after the initial filing of a civil lawsuit, he said.
“Civil enforcement actions under the executive law are treated as summary proceedings by New York courts.
Which means that it doesn’t go through an elongated trial process,” Wallach said.
“It’s a fairly expedited process to go from the filing of a civil enforcement action to an injunction hearing.”
The legal combat between Kalshi and New York began in October when the Gaming Commission sent the company a cease-and-desist order regarding its sports contracts.
Kalshi responded by suing the commission in federal court, seeking a preliminary injunction to pause the order.
But U.S.
District Court Judge Analisa Torres of the Southern District of New York denied Kalshi’s request on July 8, prompting the company to appeal.
Torres on Monday rejected an additional request for an “emergency injunction pending appeal,” writing that Kalshi “has not met its burden with respect to any of the four factors to be considered when adjudicating a motion for preliminary injunction.
Kalshi’s motion does not change this, and it does not point to any unusual or compelling circumstances which justify Kalshi’s requested relief.”
As part of its appeal, Kalshi also sought “temporary administrative relief” from the circuit court, but that too was denied on Wednesday.
The appeal will now be sent to a three-judge panel to be reviewed for a possible final ruling.
Other recent actions taken by New York to rein in prediction markets include Hochul’s executive order banning state employees from using insider knowledge to make transactions in prediction markets.
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