New York’s Gaming Regulator Asks a Judge to Make Kalshi Answer Its Subpoenas

The New York State Gaming Commission has gone to state court to force Kalshi to comply with investigative subpoenas it served in the summer, saying the prediction market has refused to hand over key records. The verified petition names Kalshi Inc. and KalshiEX LLC, and the court’s electronic filing system logged it as received by the New York County Supreme Court on October 22. It became public the next day, when pages of it circulated online.

The Commission is represented by Attorney General Letitia James’ office. The administrative subpoenas, issued on July 31, 2026, under Section 104(7) of the New York Racing, Pari-Mutuel Wagering and Breeding Law, established an initial return date of August 14.  The case is another front in New York‘s long fight over whether Kalshi’s sports contracts are gambling.

Four Sets of Records the State Wants

State prosecutors seek four distinct categories of internal corporate records:

• Event Contract Specifications: Technical parameters, pricing models, and transaction logs governing sports-event contracts offered to users physically located within New York.
• Age Verification and Under-21 Controls: Account creation logs, Know Your Customer (KYC) audit trails, and deposit records for users aged 18 to 20, given that New York law mandates a minimum age of 21 for mobile sports betting.
• Marketing and Promotional Assets: Advertising collateral, push notifications, and affiliate communications characterizing contract outcomes as “wagers,” “bets,” or sports gaming products.
• Corporate Ownership and Broker Intermediaries: Corporate governance structures, parent entity holdings, and clearing relationships executed through registered Futures Commission Merchants (FCMs).

According to the petition, the Commission wants the material “so it can determine whether to issue civil penalties against Kalshi and others for violations of the Racing Law and, if so, in what amounts.”

The Commission says Kalshi declined to produce documents for some requests and gave insufficient answers to others. “Despite multiple court rulings declining to enjoin the Gaming Commission from enforcing the Racing Law, Kalshi nonetheless refuses to comply with key Subpoena requests necessary to assess the scope of Kalshi’s operations in New York,” the petition says.

It also alleges that Kalshi has “operated a massive enterprise in New York designed to enable individuals to place wagers relating to sports and other matters.” Those are allegations, and no ruling on the petition has been reported. Kalshi had not responded to it publicly as of October 25.

The Brokers Are in the Frame Too

The petition reaches past Kalshi itself. It says there is “a legitimate basis to investigate both Kalshi’s unlicensed activities and the activities of third parties that might facilitate those activities,” and it gives Futures Commission Merchants as its example. That puts the firms carrying customers onto the exchange inside the scope of the inquiry, not just the exchange.

A Federal Court Loss Came First

The dispute goes back a year. By letter dated October 24, 2025, the Commission told Kalshi to cease and desist from operating “an unlicensed mobile sports wagering platform” in New York. Kalshi sued the Commission three days later in the Southern District of New York, arguing that the Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over its contracts.

It lost the first round. On July 7, US District Judge Analisa Torres denied Kalshi’s motion for a preliminary injunction, finding in her opinion that “New York gambling laws as applied to Kalshi’s sports-event contracts are not preempted” by the Commodity Exchange Act. Kalshi has taken the case to the Second Circuit, where its appeal was docketed on July 8 as No. 26-1835.

A $36 Billion Lawsuit on the Same Day

The subpoenas went out on the same day New York sued. On July 31, Governor Kathy Hochul and Attorney General James announced a lawsuit accusing KalshiEX of running an illegal gambling operation, and asking for forfeiture of all illegal gains, restitution and fines equal to three times those gains. According to the CFTC, New York is seeking more than $36 billion in damages.

Attorney General Letitia James put the state’s position bluntly: “No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple.” Kalshi called the suit “political theater from the leadership in our own state” and moved to shift it into federal court within eight hours.

Washington Is on Kalshi’s Side

New York is fighting the federal regulator as well as the company. The CFTC sued New York in April, seeking a declaration that federal law gives it exclusive authority over event contracts. CFTC Chairman Michael Selig said then that “New York is the latest state to ignore federal law and decades of precedent.”

After the state’s July lawsuit, the CFTC used its emergency authority on August 11 and ordered Kalshi to keep operating. “Congress did not intend for derivatives exchanges to be regulated under a patchwork of state gaming laws,” Selig said. The agency has now sued nine states, New York among them.

The Licensed Market New York Is Protecting

The state’s case rests on its licensed market. New York only lets you bet on sports through mobile operators the Commission licenses, and only from age 21, the line Kalshi is accused of ignoring with users aged 18 to 20. In fiscal year 2025/26, those licensed sportsbooks took $26.16 billion in mobile wagers and kept $2.6 billion in gross gaming revenue, which sent $1.33 billion to education, per the Commission’s own figures.

The same regulator has proposed barring sportsbooks from using AI to target bettors, and in September the Attorney General sued Polymarket US on the same illegal gambling theory. Kalshi faces similar pressure elsewhere, and this month Utah sued Kalshi too.

Kalshi’s answers were due on August 14. Ten weeks later, the Commission says the key records still have not arrived.