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The New York State Gaming Commission has escalated its regulatory battle against prediction markets by filing a lawsuit in Manhattan state Supreme Court to compel Kalshi to surrender internal corporate and sports-related betting data.
The legal action represents the latest development in an ongoing conflict between state regulators and prediction platforms, including Kalshi and rival operator Polymarket, which began roughly a year ago when the gaming commission issued a cease-and-desist order alleging that sports-related event contracts constitute unlicensed gambling. Kalshi responded to the initial enforcement action by filing a federal lawsuit against the commission.
Although U.S. District Judge Analisa Torres declined Kalshi’s request for a preliminary injunction, that ruling cleared the path for New York Attorney General Letitia James to pursue separate legal actions against Kalshi and Polymarket. Prediction markets enable users to wager funds on event outcomes across politics, weather, and sports. While operators maintain that these contracts operate as financial derivatives governed exclusively by the federal Commodity Futures Trading Commission (CFTC), New York and numerous other state regulators classify sports event contracts as unregulated gambling.
Subpoena details and corporate accountability
According to court filings submitted by the state gaming commission, a formal subpoena was issued to Kalshi on July 31. The commission demanded comprehensive transactional records, including the total monetary volume invested or traded by New York consumers, the volume of sports contracts purchased by users under 21 years of age, and records concerning promotional and marketing campaigns. Furthermore, the state requested corporate governance information identifying individuals involved in the “self-certification” of Kalshi’s sports-related offerings.
“This information will assist Commission staff in determining which Kalshi products violate the Racing Law, appropriate civil penalty amounts, if any, and whether other entities may be violating the Racing Law,” attorneys for the gaming commission stated in court documents. Under New York state law, executives such as co-founders Tarek Mansour and Luana Lopes Lara could face personal liability for regulatory violations, while the company itself might be compelled to issue refunds to users nationwide due to its New York City headquarters presence.
Communications breakdown and legal resistance
The commission noted that a video conference held with Kalshi’s legal team on August 13 failed to resolve the dispute, with state officials asserting that representatives were unwilling or unable to address substantive objections before demanding the withdrawal of the subpoena. Kalshi’s legal representatives maintained that the requests constituted an impermissible “fishing expedition” designed to circumvent discovery processes in the ongoing federal litigation. Although Kalshi provided a partial response on September 18, it omitted internal records and communications entirely, prompting the commission’s latest petition for judicial enforcement.
