A class action lawsuit filed in Massachusetts has accused DraftKings of offering illegal sports betting by disguising its prediction market products as event contracts.
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On July 31, 2026, the state of New York filed a case against prediction market Kalshi, accusing the platform of running an illegal and unlicensed gambling operation and seeking to ban the company from continuing to offer its products in the state.
The lawsuit was filed in a state supreme court in Manhattan, supported by New York Governor Kathy Hochul and Attorney General Letitia James. The AG’s office has urged the court to order Kalshi to give up all illegal gains, pay restitution to affected users, and pay a penalty equal to three times the operator’s profits.
AG James shared:
“New York’s gambling laws protect children from underage betting and help combat gambling addiction. 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.”
According to the court filings, the state argued that Kalshi has been operating without a license and has breached New York laws by offering sports betting. Additionally, the complaint states that Kalshi allowed 18- to 20-year-olds to trade on its platform, although state law requires users to be over 21.
Governor Hochul added:
“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. 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.”
The state has estimated the action at around $36 billion before costs, attorney fees, and punitive damages.
