New York's Gaming Commission has gone to state court to compel Kalshi, the country's largest prediction market platform — a venue where users trade contracts on the outcomes of real-world events — to hand over documents the regulator first requested three months ago. In a verified petition filed in the New York County Supreme Court, the Commission named Kalshi Inc. and KalshiEX LLC as respondents. The court logged the filing on October 22, and it became public a day later, when sports betting attorney Daniel Wallach detailed the action in a thread on X.

BREAKING: The NYS Gaming Commission has sued Kalshi in NY County Supreme Court to force compliance with subpoenas seeking records on its sports-event contracts, offerings to NY'ers under 21, ads describing its products as wagers or bets, and ownership and corporate structure. pic.twitter.com/17Iiy3b0aV — Daniel Wallach (@WALLACHLEGAL) October 23, 2026 (via X)

The petition introduces no new violations. Its purpose is to have the court enforce investigative subpoenas the Commission issued on July 31 under section 104(7) of the state's Racing Law. Such petitions are the customary route for turning unanswered administrative subpoenas into court-enforceable orders. According to the regulator, the prediction market platform has refused key requests outright and provided insufficient answers to others. Kalshi has not publicly responded.

Four Categories of Records

The subpoenas demand four sets of documents: Kalshi's sports-event contracts, its offerings to New Yorkers under the age of 21, advertising that describes its products as wagers or bets, and its ownership and corporate structure. The Commission says the material is needed to determine whether to fine the prediction market "and others" — and by how much. The petition also alleges that Kalshi has operated a sports wagering business in New York for at least 18 months without the license the Racing Law requires.

Kalshi's Defense Rests on the Derivatives Label

Kalshi has consistently maintained that its event contracts are financial products overseen by the Commodity Futures Trading Commission (CFTC), placing them beyond the reach of state gambling laws. New York, however, could turn Kalshi's own marketing against it: if the company's advertisements describe the event-based contracts as bets, the state can cite that language as evidence that even Kalshi treats them as wagers.

The under-21 records request poses a comparable risk. Licensed sportsbooks in New York may serve only customers aged 21 and older, and the attorney general's July lawsuit alleged that 18- to 20-year-olds can trade on the platform.

Geography adds to the pressure. Kalshi is headquartered in New York City, meaning a refusal to obey a state court order would expose it to contempt proceedings at home. The CFTC's August 11 emergency order allows Kalshi to keep trading in the state, though it remains unclear whether that federal action shields the company from a state investigative subpoena.

The Petition Opens a Third Front

The filing marks a third legal front in New York. On July 31, Attorney General Letitia James and Gov. Kathy Hochul sued Kalshi, seeking forfeiture, restitution and triple fines, with claimed damages of at least $36 billion. Kalshi moved that case to federal court the day.

The stakes are highest in Kalshi's own case. On July 7, Judge Torres denied its request for a preliminary injunction, finding that federal commodities law likely does not preempt New York gambling law as applied to sports contracts. The Second Circuit rejected Kalshi's emergency request on July 29, and its appeal remains pending. That eventual ruling will determine whether New York can regulate Kalshi at all. In the meantime, the subpoena fight shows the Commission building its penalty file.

Appeals Courts Have Split on State Authority

Kalshi is fighting the same core question in courts across the country: can states apply their gambling laws to its sports contracts, or does federal commodities law override them? Each case is heard by the federal appeals court covering the state in question — and so far, the circuits disagree.

The Third Circuit, which covers New Jersey, sided with Kalshi 2-1 in April. The Ninth Circuit ruled 3-0 against the company in Nevada in August, and on September 25 the Sixth Circuit did the same in Ohio and Tennessee. That leaves Kalshi with one win and two losses at the appeals level, and its New York appeal will determine which side the Second Circuit takes. Under the U.S. Supreme Court's own criteria, a disagreement among the circuits is a recognized reason for the justices to take up a case.

States are not waiting for the outcome. Last week, Utah sued Kalshi, seeking a geofence that would block its users there and up to $61.2 million in fees. Ohio has given its licensed gaming operators until October 30 to sever ties with prediction market platforms. The CFTC, for its part, is pushing back against the states, suing New York, Arizona, Connecticut and Illinois in pursuit of a ruling that event contracts fall under federal authority alone.

No hearing date has been reported in the Manhattan case. Kalshi could still attempt to move the petition to federal court, as it did with the attorney general's lawsuit.