Prediction market Kalshi has filed a lawsuit against the New York State Gaming Commission in the US District Court for the Southern District of New York, asking the court for a “permanent injunction and declaratory relief.” It comes as it filed a brief response opposing Nevada regulators’ request for an emergency review of their effort to lift a preliminary injunction.
According to the complaint filed on Monday (October 27), “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 (‘CFTC’).”
I guess we’re just filing lawsuits on weekends now. Kalshi files a preemption suit against New York. pic.twitter.com/wAKyeWD5c3
— Andrew Kim (@akhoya87) October 27, 2025
Kalshi receives cease-and-desist letter from New York Gaming Commission
Kalshi argues that the New York State Gaming Commission “seeks to prevent Plaintiff KalshiEX LLC (‘Kalshi’) from offering event contracts for trading on its federally regulated exchange” and “does so by threatening Kalshi with imminent civil penalties and fines for offering these contracts.”
The dispute stems from a cease-and-desist letter the Gaming Commission sent to Kalshi on Friday (October 24), claiming that offering event contracts based on sporting events taking place in New York State without a sports gaming license would violate state law. The letter directed Kalshi to “cease and desist immediately from illegally advertising, promoting, administering, managing, or otherwise making available sports wagering and/or a mobile sports wagering platform in New York.”
The Gaming Commission also warned that it was empowered to “levy and collect civil penalties and fines for any violation of the Racing Law.” It identified 20 of Kalshi’s federally self-certified event contracts as unlawful and “demanded Kalshi cease and desist operations and without providing a compliance date.”
The commission confirmed to ReadWrite that it had sent the letter, providing us with a copy. It stated: “Kalshi is not licensed by the Commission to offer a platform for sports wagering in New York, either at a casino or as a mobile sports wagering operator.
“The Commission reserves all rights to investigate further and to levy and collect
civil penalties and fines in connection with Kalshi’s prior, current, and any future activity related to sports wagering and/or mobile sports wagering in New York.”
Federal vs state regulations
Kalshi’s complaint argues that the commission’s enforcement actions would put the company in conflict with both federal and state regulations. “Kalshi has no option but to seek judicial relief,” the company wrote, citing the cease-and-desist letter that “demands that Kalshi immediately cease operating in New York or face criminal and civil liability.”
The company said that, because its platform “listed contracts that were [to] be traded over the weekend,” it had “no other practical choice to protect its commercial interests and those of its users except to bring this suit.” It warned that, “Absent judicial relief, Kalshi faces the prospect of criminal enforcement and civil penalties in New York as of the date of this filing.”
The complaint presents the issue as a matter of federal preemption, arguing that only the Commodity Futures Trading Commission has the authority to regulate Kalshi’s event contract marketplace, not state gaming regulators.
A spokesperson from the company told ReadWrite: “The threatened actions from the New York Gaming Commission seek to undermine not just Kalshi’s contracts, but the authority granted by Congress to the Commodity Futures Trading Commission, which has safely and effectively governed commodities markets for decades.
“Prediction markets are a critical innovation of the 21st century, and like all innovations, they are initially misunderstood. We are proud to be the company that has pioneered this technology and stand ready to defend it in a court of law.”
Kalshi has already filed federal lawsuits in Maryland, Nevada, New Jersey, and Ohio to stop state enforcement actions. Massachusetts has also filed its own state court case to block Kalshi from offering sports event contracts there.
UPDATED: Statement from Kalshi and letter from New York State Gaming Commission have been included on October 27, 2025.
Featured image: Kalshi / Canva
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