New York AG seeks court order forcing Kalshi to comply with subpoena

New York Attorney General Letitia James has asked the New York County Supreme Court to force Kalshi to comply with a subpoena issued on 25 September, opening a new legal front against the prediction market operator.

James filed the petition on Monday, accusing Kalshi of ignoring the subpoena. Her office says the document request stems from a civil inquiry it has kept running into possible fraud and misleading practices involving Kalshi and other participants across the prediction-market sector.

The filing asks the court to order Kalshi to produce the requested documents within 10 days and to impose a penalty on the company.

According to the petition, the investigation centres on three areas of Kalshi's marketing: influencer content depicting large wins, including social media posts in which users claim their Kalshi earnings covered rent or replaced a paycheck; creators who allegedly failed to disclose that they were being paid to promote the platform; and the way Kalshi presents itself to users — as a peer-to-peer marketplace without a house, even though it is tied to an affiliated market maker, Kalshi Trading.

James's office said examining Kalshi's advertising, its arrangements with third parties and the role of its in-house and external market makers is, in its words, "critical to OAG's ability to determine whether Kalshi (or others on its behalf) engaged in fraudulent or deceptive conduct and/or made false or misleading statements to consumers in its advertising."

The subpoena itself reaches well beyond advertising copy. It seeks documents covering marketing efforts tied to Kalshi itself, its co-founders — Tarek Mansour and Luana Lopes Lara — along with company executives and any outside parties the firm hired for promotion, plus the trades those paid promoters placed and what Kalshi paid them.

It also demands records on Kalshi's own proprietary trading and liquidity provision, along with its arrangements with outside market makers and five named schemes — a program rewarding trading volume, one for liquidity incentives, another for liquidity providers, a combo incentive scheme and a market-maker program. Kalshi shut down the volume-based scheme in October after questions arose over how much trading it was generating on the platform.

That scrutiny of market makers mirrors a separate dispute in Utah, where state Attorney General Derek Brown brought an illegal-gambling suit naming two Susquehanna trading entities as defendants, contending that firms providing liquidity are effectively acting as the house.

This marks the fourth active legal track New York has opened against Kalshi since October 2025, when the New York State Gaming Commission issued a cease-and-desist order and Kalshi responded by suing the regulator. In July, U.S. District Judge Analisa Torres turned down Kalshi's request for a preliminary injunction, and a judge on the Second Circuit separately declined to grant one pending appeal — an appeal that has yet to be resolved.

James followed the appellate setback with a $36 billion lawsuit against Kalshi on 31 July, alleging the company runs an unlicensed sportsbook. Kalshi moved that case to federal court, and New York's bid to have the case returned to state court remains outstanding.

Separately, the Commodity Futures Trading Commission brought its own suit against New York in April, then issued an emergency declaration ordering Kalshi to continue operating within the state — a directive New York has asked courts to ignore. Separately, the Gaming Commission went to court on 22 October to enforce subpoenas from 31 July covering sports contracts, underage users, wagering-style advertising and corporate ownership, with a hearing scheduled for 14 December.

James also sued the rival prediction market Polymarket in September, as the broader jurisdictional dispute over sports event contracts continues to head toward the U.S. Supreme Court. The new marketing-focused petition against Kalshi does not depend on that gambling-law preemption question, giving James a consumer-protection route that can proceed on its own timetable.