Woofun AI reports that New York has initiated a lawsuit against Kalshi, characterizing the prediction-market operator as a gambling platform 'plain and simple' for offering wagers without a license.

The complaint, filed in the New York Supreme Court on Friday, seeks to bar the company’s unlicensed operations and demands an accounting of customer bets, losses, and company gains. Governor Kathy Hochul and Attorney General Letitia James announced the pursuit of restitution, damages, and civil penalties, including a fine equal to three times Kalshi’s gains plus $100,000 for each unauthorized offer of sports or mobile sports wagering.

Structurally, this legal pressure contrasts with a recent victory in Minnesota, where the U.S. District Court for the District of Minnesota granted a preliminary injunction to Kalshi and rival Polymarket. The court ruled that the state’s ban on prediction markets likely violates the Commodity Exchange Act, siding with the companies and the Commodity Futures Trading Commission. This occurs despite Kalshi targeting a $40 billion valuation during a June funding round.

Per Woofun AI, the lawsuit highlights specific violations, including event contracts on professional and college sports, elections, and culture. The state alleges Kalshi permits users aged 18 to 20 to wager and lists markets involving New York college teams, both prohibited for licensed sportsbooks. User growth surged from 2 million at the start of May to 3 million during the World Cup, according to CNBC, raising concerns about gambling addiction.

This litigation follows an October cease-and-desist order from the New York State Gaming Commission. A federal judge denied Kalshi’s bid to block regulators on July 7 and rejected an injunction pending appeal on July 27, . The state’s aggressive stance signals a deepening regulatory conflict over the classification of prediction markets.