Kalshi state lawsuits have reached New York, with cofounder and CEO Tarek Mansour telling CNBC on Monday that the mounting legal pressure is a predictable chapter in the story of any disruptive industry.
‘I think the more interesting thing that’s at play here is that you have an industry, the prediction market industry, that is disruptive, that is growing fast, consumers are adopting it, and it’s threatening a legacy incumbent industry that is unhappy about that,’ Mansour said.
He reached for two well-worn comparisons. ‘That has played out over and over. It’s played out with taxis and Uber. It’s played out with hotels and Airbnb,’ he said, adding that incumbent industries carry ‘large lobbies’ that are ‘effective at getting actions’ filed against new entrants.
‘The playbook is very simple. It’s: Litigate. Then you try to legislate. And then finally, when you realize that consumer demand is not going to go away, you try to compete and innovate,’ Mansour said. ‘That’s the cycle that we’re going through right now.’
New York Joins the Kalshi State Lawsuits with Gambling Allegations
New York Attorney General Letitia James filed a petition against KalshiEx LLC in the Supreme Court of the State of New York on 31 July 2026, styled People of the State of New York v. KalshiEx LLC. KalshiEx LLC is a Delaware limited liability company with its principal place of business in New York.
The New York AG’s office is seeking a court order to stop Kalshi from operating as an unlicensed gambling business, along with fines, forfeiture of all illegal gains, and restitution to users.
‘New York’s gambling laws protect children from underage betting and help combat gambling addiction,’ James said on Friday. ‘No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple. By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process.’
New York’s move follows a sequence of earlier state-level actions. The New York State Gaming Commission issued a cease-and-desist letter to Kalshi in October 2025, accusing the company of operating an unlicensed mobile sports wagering platform. In April 2026, Governor Hochul signed an Executive Order barring state employees from using prediction markets such as Kalshi to engage in insider trading.
Kalshi also lost a separate lawsuit it had filed against the New York Gaming Commission. Attorney General James and Governor Hochul released a joint statement after that ruling, which read: ‘Kalshi tried to ignore [New York’s gambling laws]. Yesterday, they lost in court,’ according to the New York AG’s press release on the ruling.
The CFTC Has Been Fighting the Kalshi State Lawsuits in Federal Courts
The Commodity Futures Trading Commission (CFTC) has taken an active role in trying to block state enforcement. The CFTC filed its own lawsuit against the State of New York on 24 April 2026 in the U.S. District Court for the Southern District of New York (Case No. 1:26-cv-03404), arguing that federal law pre-empts state gambling rules when applied to CFTC-registered contract markets, according to the CFTC’s press release on that filing.
New York is not alone on the CFTC’s list. The regulator filed actions against Arizona, Connecticut, and Illinois on 2 April 2026, and against Wisconsin on 28 April 2026, as part of a broader effort to assert exclusive federal jurisdiction over prediction markets, according to Steptoe’s analysis of the litigation landscape. The CFTC also secured a temporary restraining order against state regulation in Arizona.
Separately, the CFTC filed an amicus brief on 24 April 2026 in the Massachusetts Supreme Judicial Court in Commonwealth of Massachusetts v. KalshiEx LLC, No. SJC-13906, asserting the CFTC’s exclusive jurisdiction over event contract markets, according to a separate CFTC press release.
CFTC chief Michael Selig wrote on X on Friday: ‘Rather than seek reasoned answers from the courts, Letitia James and New York seek to force an unprecedented, sudden shutdown of prediction markets nationwide. The CFTC has already sued to stop this and will continue to defend its jurisdiction.’
Federal courts have not consistently sided with the CFTC’s position, however. Judge Victor Marrero of the Southern District of New York denied an emergency motion for a temporary restraining order in August 2026, and a separate ruling from the same court on 9 July 2026 also went against the federal position, leaving New York free to pursue enforcement against Kalshi while the preliminary injunction fight continues, according to the DeFiRate prediction market litigation tracker.
Kalshi’s regulatory standing at the federal level remains intact for now. The CFTC designated KalshiEx LLC as a Designated Contract Market (DCM) on 3 November 2020 (DCM filing No. 42993), and on 17 January 2025 modified that designation to permit intermediated futures trading, according to the CFTC’s industry filings page. On 29 August 2024, the CFTC also registered Kalshi Klear LLC as a derivatives clearing organisation (DCO) under the Commodity Exchange Act, making it one of 18 DCOs registered with the CFTC at that time. The CFTC also published an advance notice of proposed rulemaking on prediction markets in the Federal Register on 16 March 2026 (91 Fed. Reg. 12516), inviting public comment on the sector’s regulatory framework.
The next flashpoint is the preliminary injunction hearing in the Southern District of New York, where the outcome will determine whether federal pre-emption or state gambling law governs prediction markets, at least for now.