New York Asks Court to Enforce Kalshi Subpoenas - DeFi Rate
New York has sued Kalshi in Manhattan court to enforce investigative subpoenas seeking the prediction market's records on sports contracts, customer access, advertising, and corporate structure.
The New York State Gaming Commission filed the petition on October 22, alleging that Kalshi refused some document requests and provided insufficient responses to others. The commission needs the material to determine whether to impose civil penalties for alleged violations of New York's gambling laws and to assess the appropriate penalty amounts.
Regulators seek specific information
The subpoenas, issued July 31 under Section 104(7) of New York's Racing, Pari-Mutuel Wagering and Breeding Law, target four broad categories of information. These include Kalshi's sports event contracts, products offered to New Yorkers under 21, advertising describing products as wagers or bets, and the company's ownership structure.
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.
Separate case seeks shutdown
This action is separate from a lawsuit announced July 31 by Governor Kathy Hochul and Attorney General Letitia James. That case alleges Kalshi operates an unlicensed gambling business while making markets available to users ages 18-20, violating New York's requirement that mobile sports bettors be at least 21. The state seeks to stop the operation, forfeit gains, provide consumer restitution, and impose fines equal to three times the alleged unlawful gains.
Federal defense doesn't resolve records fight
Kalshi maintains its event contracts fall under federal Commodity Futures Trading Commission authority rather than state gambling regulation. However, after a federal district court denied Kalshi's request for a preliminary injunction against New York enforcement, the state proceeded with its investigation. The immediate legal question now is whether Kalshi must produce the requested documents, not the broader jurisdictional battle.
For New York, the subpoenas move toward deciding what penalties to pursue. For Kalshi, they create another compliance dispute as it tries to keep state gambling regulators out of its business.
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