New York has filed a lawsuit seeking to stop Kalshi from operating what officials describe as an unauthorized gambling platform and is pursuing financial penalties related to the company’s activities.

The state accused prediction-market operator Kalshi of offering sports and event-based wagering products to New York residents without the required gaming license.

The lawsuit, filed Friday in the New York Supreme Court, asks the court to prevent Kalshi from continuing what regulators classify as an unlicensed gambling operation. It also seeks information on customer wagers, losses, and company revenue, along with restitution, damages, and civil penalties.

According to a statement from Governor Kathy Hochul and Attorney General Letitia James, New York is requesting a penalty worth three times Kalshi’s earnings from the alleged activity, as well as $100,000 for each unauthorized or attempted sports betting and mobile wagering offering.

James said the state’s gambling regulations are designed to protect minors and help address gambling addiction concerns. She argued that prediction markets offering wager-based contracts are gambling services regardless of the labels used to describe them.

Kalshi, which pursued a $40 billion valuation in a June fundraising round, is among several prediction-market companies facing regulatory disputes throughout the United States. The company recently gained a temporary legal advantage in Minnesota, where a federal court ruled that the state’s restrictions on prediction markets may conflict with the Commodity Exchange Act. The court granted a preliminary injunction preventing enforcement of the law against Kalshi, Polymarket, and the Commodity Futures Trading Commission.

Elisabeth Diana, Kalshi’s head of communications, criticized New York’s legal action, calling it unnecessary political intervention. She said states cannot block a federally licensed exchange and warned that restrictions could push users toward offshore alternatives. Diana added that the company values its relationship with New York and its users.

The attorney general’s office said Kalshi’s event contracts function as bets and claimed the platform offers markets connected to professional sports, college athletics, elections, and cultural events. The lawsuit alleges that Kalshi allows users aged 18 to 20 to place wagers and offers contracts involving New York college teams, activities that are restricted for licensed sportsbooks in the state.

Kalshi’s user base expanded significantly during the World Cup, adding 3 million users throughout the tournament, according to CNBC. The increase brought its total users to more than double the 2 million figure reported at the beginning of May.

The lawsuit follows an October cease-and-desist order issued by the New York State Gaming Commission, according to the attorney general’s office.

Kalshi has already faced challenges from state regulators, with a federal judge rejecting the company’s request to block enforcement action on July 7 and later denying an injunction request during its appeal on July 27.