Kalshi Files New York Lawsuit Over Cease-and-Desist Order

^{Kalshi’s case against New York’s Gaming Commission adds to a growing legal clash over the regulation of prediction markets throughout the United States.  (Photo: Eye35.pix / Alamy)}

Prediction market platform Kalshi filed a federal lawsuit in the Southern District of New York on Monday in an attempt to block enforcement of a case-and-desist order issued by the New York State Gaming Commission.

The company is seeking a preliminary injunction and temporary restraining order against the Gaming Commission after the regulator claimed that the company was offering unlicensed sports betting in the state. 

Kalshi Fighting State Regulators Across the USA

Kalshi argues that state gaming regulators have no authority to regulate its exchanges, with only the Commodity Futures Trading Commission (CFTC) being able to oversee its activities.

“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,” the lawsuit states. “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.”

Kalshi has run into similar standoffs in states like Nevada, New Jersey, and Maryland. The prediction platform began offering sports event contracts in early 2025, after debuting markets on the 2024 presidential race . Tribal groups have also opposed the move, warning that sports prediction markets threaten their revenue.

However, many state regulators say that sports-based contracts are functionally equivalent to sports betting, since payouts are based on the results of games, player statistics, award winners, and more. 

Early Victories Keep Kalshi Sports Contracts Active, For Now

Kalshi has had some initial success in its fights against state officials. As the company notes in its lawsuit against the New York State Gaming Commission, “federal courts in Nevada and New Jersey granted Kalshi preliminary injunctions to prevent similar state overreach” earlier this year. However, that wasn’t the case in Maryland, where a judge ordered the company to halt its sports-related contracts. 

Even where Kalshi has enjoyed early legal success, there is no guarantee that they will ultimately prevail. Nevada is attempting to dismiss the company’s injunction request, and the judge overseeing the case has signaled that she doesn’t think it’s clear that Kalshi’s sports event contracts fall under CFTC jurisdiction.

“Defendants should not be forced to accept Plaintiff’s conclusion that contracts offered on its DCM have independent real-world consequences and thus, fall under the exclusive jurisdiction of the CFTC,” Judge Brenda Weksler of the U.S. District Court for the District of Nevada said. “Given Kalshi’s ability to self-certify contracts, Defendants should not be required to accept as a fait acompli that ‘the CFTC has taken no action to bar Kalshi’s contract on the grounds that they are not swaps.’”

The outcomes of these lawsuits could have repercussions for companies beyond Kalshi. Polymarket, the world’s largest predictive marketplace, is set to return to the US market as early as late November, with reports suggesting that sports will be its main focus.