New York Sues Kalshi, Seeks at Least $36 Billion

Kalshi lets users trade event contracts tied to sports, elections and other outcomes, arguing that its status as a designated contract market overseen by the U.S. Commodity Futures Trading Commission puts it under federal commodities law rather than state gambling regimes. The stakes extend across the fast-growing prediction-market industry: Kalshi recorded $33 billion in volume in June 2026, compared with a combined $13.95 billion for Polymarket and its U.S. platform.

King County Superior Court Judge John McHale on July 20, 2026, granted the Washington Attorney General’s Office a preliminary injunction, finding the state was likely to prove Kalshi violated the Washington Gambling Act and Consumer Protection Act. He also rejected Kalshi’s argument that the federal Commodity Exchange Act preempts state law. The court will review further submissions by Aug. 3, with the order set to take effect no earlier than Aug. 5 and temporarily bar sports-related event contracts in Washington.

Kalshi is a Commodity Futures Trading Commission-regulated designated contract market where users trade yes-or-no event contracts that settle at a maximum of $1. The New York State Gaming Commission argues that sports contracts constitute gambling subject to state law. The dispute centers on whether the federal Commodity Exchange Act preempts state enforcement and could also affect the platform’s cost of operating across state lines.

On July 7, 2026, U.S. District Judge Analisa Torres of the Southern District of New York denied Kalshi’s motion for a preliminary injunction. She found that the company had not sufficiently shown that federal law preempted New York’s gambling laws and that the associated compliance costs did not constitute irreparable harm. Kalshi filed a notice of appeal the same day, and the case entered the U.S. Court of Appeals for the Second Circuit on July 8 under docket number 26-1835.

Kalshi offers event contracts as a designated contract market regulated by the US Commodity Futures Trading Commission (CFTC). The central legal question is whether contracts allowing users to trade on outcomes are federally regulated derivatives or sports betting products subject to state oversight. The rulings will determine whether prediction markets can operate nationwide.

In early July 2026, Kalshi failed to secure a Nevada Supreme Court stay of an order blocking trading in the state, while a Michigan court issued a separate two-week temporary restraining order. The company also sued Ohio regulators and mounted a legal defense in Minnesota. North Carolina’s proposed budget would impose a 6% tax on related revenue, while Kalshi’s deadline to appeal in New Jersey was extended to August 4.

Kalshi offers event contracts that allow users to trade on sports outcomes and maintains that it is federally regulated by the U.S. Commodity Futures Trading Commission. Massachusetts Attorney General Andrea Joy Campbell sued the company in September 2025, arguing that the trades are effectively sports betting and require a license from the Massachusetts Gaming Commission. The case will determine whether federal derivatives regulation preempts state gambling laws.

Massachusetts Suffolk County Superior Court Judge Peter Krupp on June 30, 2026, allowed the state to file a 71-page amended complaint. The new allegations say Kalshi targeted people under 21 through social media and college-campus marketing while allowing customers aged 18 and older to open accounts and buy sports event contracts. The court had issued a preliminary injunction in January 2026 barring the platform from offering such contracts in Massachusetts while the case proceeds.

Kalshi is a prediction-market platform regulated by the U.S. Commodity Futures Trading Commission (CFTC) that allows users to trade contracts based on sporting-event outcomes. Illinois has subjected such products to state sports-betting restrictions, sparking a dispute over whether federal derivatives oversight preempts state intervention. The outcome could also affect how prediction markets operate across states.

Kalshi recently sued Illinois officials to challenge a provision in the state's newly enacted budget bill that is scheduled to take effect on July 1. The company argues that restrictions on sporting-event contracts encroach on the CFTC's exclusive regulatory authority. It is seeking to block enforcement, saying the provision would immediately restrict its products and cause irreparable harm that monetary damages could not adequately remedy.

Kalshi is a designated contract market regulated by the US Commodity Futures Trading Commission, allowing users to trade event contracts tied to outcomes including sports results. Each contract settles at a maximum of $1. New Jersey's Division of Gaming Enforcement classified the activity as unlicensed sports betting, raising the question of whether federal derivatives regulation preempts state law.

On April 6, 2026, the US Court of Appeals for the Third Circuit voted 2–1 to uphold a preliminary injunction issued on April 28, 2025. The court found that sports event contracts are swaps under the Commodity Exchange Act and fall under the CFTC's exclusive jurisdiction. On June 26, the state separately requested an extension until September 4 to file a petition for a writ of certiorari with the Supreme Court.

Kalshi is a designated contract market approved by the U.S. Commodity Futures Trading Commission, or CFTC, and argues that its event contracts are federally regulated derivatives. Arizona maintains that the platform accepts wagers on sports and elections, amounting to unlicensed gambling. The case turns on whether federal commodities law preempts state enforcement and could reshape how prediction-market oversight is divided across the United States.

Arizona Attorney General Kris Mayes charged KalshiEx LLC and Kalshi Trading LLC on March 17, 2026, with 20 misdemeanor counts, including four related to election betting. The indictment did not specify the amount involved or damages sought. U.S. District Judge Michael Liburdi first paused the prosecution on April 10 and issued a preliminary injunction on May 5, finding that the CFTC may have exclusive jurisdiction over the contracts at issue.

Kalshi, an event-contract exchange founded in 2018 and launched in 2021, lets users wager on real-world events through “yes/no” contracts. It expanded into politics in 2024 and sports in 2025. The dispute centers on whether the federal Commodity Exchange Act preempts state gambling laws, with implications for the regulatory boundaries of prediction markets across the United States.

Washington Attorney General Nicholas Brown sued Kalshi in King County Superior Court on March 27, 2026, alleging that it offered wagering on elections, sports and judicial events without a license from the Washington State Gambling Commission. Contracts cost $0.01–$0.99 each and pay the winner $1. The state is seeking a permanent injunction, restitution for all losses incurred by residents, disgorgement of proceeds and penalties for each violation. The complaint did not specify a total amount.