New York officials have sued prediction market platform Kalshi, calling it an “illegal, unlicensed gambling operation” as the state seeks to halt its operations and force the company to forfeit its profits.

New York joins a growing number of states filing lawsuits against Kalshi and other companies in a battle with President Donald Trump’s administration over who regulates the fast-growing prediction market. Kalshi and other platforms argue they are federally licensed and regulated, and states have no authority to govern them.

“It’s sad to see this type of political theater from the leadership in our own state,” Elisabeth Diana, a spokesperson for New York-based Kalshi, said in a statement. “States can’t just shut down a federally licensed exchange. This would also hurt New Yorkers, who would be driven offshore. We love New York, we love New Yorkers, and New Yorkers love our product.”

New York Gov. Kathy Hochul and Attorney General Letitia James, both Democrats, announced the lawsuit filed in state Supreme Court in Manhattan.

“New York’s gambling laws protect children from underage betting and help combat gambling addiction,” James said in a statement. “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.”

James’ office is requesting that Kalshi be ordered to forfeit all illegal gains, pay restitution to consumers who were harmed and pay fines equal to three times the company’s gains.

Kalshi had been in negotiations with New York officials in recent weeks over tax and consumer protection issues.

In April, New York filed a similar lawsuit against prediction market platforms Coinbase and Gemini on illegal gambling operation allegations.

State officials say the prediction markets meet the legal definition of gambling “because the outcomes of the events on which its users are betting are uncertain and outside the control of the bettor or hinge on a game of chance.”

New York claims Kalshi has failed to obtain a license from the state Gaming Commission and skirted its obligation to pay taxes like licensed casinos and mobile sports gambling platforms do. The lawsuit also says prediction markets allow users ages 18 to 20, while New York requires mobile sports betting users to be at least 21.

Prediction market platforms say they operate differently than gambling operations, because consumers are trading against other consumers — much like how stock markets work. Prices are based on trading, and the platforms only take a fee from the trading, they say.

The platforms also argue federal law gives the U.S. Commodity Futures Trading Commission exclusive jurisdiction to regulate transactions offered in the prediction market. In February, Trump’s appointee atop the federal commission declared that the agency “will no longer sit idly by” while states aim to regulate or ban prediction markets and “undermine the agency’s exclusive jurisdiction.”

States counter that the vast majority of the business on prediction market platforms is sports betting, which they are empowered to regulate, and that is completely different from the commodities and futures contracts that the commission regulates.

On Monday, a federal judge temporarily blocked Minnesota’s first-in-the-nation law banning prediction markets just days before it was to take effect — dealing a setback for states trying to outlaw or regulate the platforms.

A tangle of lawsuits is growing, as states try to use their gambling laws to shut down Kalshi, Polymarket and other prediction market operators. In April alone, the federal government sued Connecticut, Arizona and Illinois, challenging their efforts to regulate the industry.