Kalshi has entered a legal battle with another U.S. state, and it’s a big one.
Key Takeaways
- Kalshi filed a lawsuit to seek a preliminary injunction keeping New York regulators from taking action against the prediction market platform.
- The New York Gaming Commission sent a cease-and-desist order to Kalshi on Friday.
- The Empire State has America’s most lucrative sports betting market.
The prediction market platform filed a lawsuit against New York on Monday seeking an emergency temporary restraining order and a preliminary injunction to keep Empire State regulators from penalizing Kalshi.
The lawsuit came days after the New York Gaming Commission – which oversees online sports betting, in-person casinos, and fantasy sports – sent Kalshi a cease-and-desist order. Kalshi countered by filing the lawsuit under its claim that only the Commodity Futures Trading Commission can regulate the trading exchange, a legal tactic that is also used in Ohio.
“This action challenges the State of New York’s intrusion into the federal government’s exclusive authority to regulate derivatives trading on exchanges overseen by the Commodity Futures Trading Commission,” Kalshi stated in the court document. “The New York State Gaming Commission seeks to prevent (Kalshi) from offering event contracts for trading on its federally regulated exchange. It does so by threatening Kalshi with imminent civil penalties and fines for offering these contracts.
“New York’s attempt to regulate Kalshi intrudes upon the federal regulatory framework that Congress established for regulating derivatives on designated exchanges. The state’s efforts to regulate Kalshi are both field-preempted and conflict-preempted. This Court should therefore issue both a preliminary and a permanent injunction, as well as declaratory relief.”
Similar arguments
Kalshi has used similar arguments in lawsuits filed against Nevada and New Jersey. The prediction market company says its contracts are legal under federal law. States, like New York, have deemed Kalshi’s trading as unlicensed sports betting.
The prediction market platform is offering sports contracts on leagues like the NFL, NBA, MLB, and NCAA in all 50 states, including New York, the most lucrative sports betting state in the U.S. There are eight online sportsbooks regulated and licensed by the Empire State, and operators combined to generate a $2.29-billion handle in September.
“This letter constitutes a demand by the Commission that Kalshi cease and desist from illegally operating, advertising, promoting, administering, managing, or otherwise making available an unlicensed mobile sports wagering platform in New York State in connection with any sports event, whether through any of the contracts as described in the filings with the Secretary of the United States Commodity Futures Trading Commission (“CFTC”) identified below (collectively, the “CFTC Filings”), or otherwise, including, without limitation, any other contract or product that provides an opportunity to risk something of value based upon an agreement or understanding that a person will receive something of value in the event of a certain outcome in connection with any sports event within the meaning of Racing Law,” the commission stated in the cease-and-desist order.
Regulators deem Kalshi’s sports markets as “staking or risking something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he will receive something of value in the event of a certain outcome with respect to a sports event.” That makes the prediction market platform acting as an unlicensed operator, the commission said.
The gaming commission went on to show numerous examples of Kalshi’s sports contracts that it takes exception to the company offering in New York, including future markets on professional sports and game outcomes.
Under attack
New York and other jurisdictions have threatened criminal action and levying penalties and fines for Kalshi operating there.
“Earlier this year, federal courts in Nevada and New Jersey granted Kalshi preliminary injunctions to prevent similar state overreach,” Kalshi stated in the New York lawsuit. “These courts enjoined state officials from attempting to prohibit Kalshi’s event contracts, explaining that “because Kalshi is a CFTC-designated DCM, it is subject to the CFTC’s exclusive jurisdiction and state law is field preempted.”
Nevada has fought back against Kalshi’s lawsuit, requesting a motion to dismiss the preliminary injunction. A hearing is set for Nov. 14.
Sports betting and gaming lawyer Daniel Wallach refuted several of Kalshi’s claims in the lawsuit.
News: Kalshi files federal lawsuit against New York State after receiving cease-and-desist letter from @NYSGamingComm on Friday evening and will soon be filing a motion for preliminary injunction to prevent NYS from from enforcing its gambling laws vs. Kalshi. (h/t @akhoya87) pic.twitter.com/GfONveCQx4
— Daniel Wallach (@WALLACHLEGAL) October 27, 2025
