A cease and desist order from the New York State Gaming Commission (NYSGC) is at the heart of a new suit filed by Kalshi over sports event contracts.
According to documents filed in the U.S. District Court for the Southern District of New York, Kalshi is suing the NYSGC and its leadership for the state’s “intrusion into the federal government’s exclusivity authority” to regulate prediction markets and their event contracts. Kalshi is suing the NYSGC after receiving a cease and desist order from the commission for offering sports event contracts in New York, which it claims violates state gaming laws.
Kalshi is seeking a preliminary and a permanent injunction, along with declaratory relief, to keep its sports event contracts online in New York. The cease and desist order also requires Kalshi to stop “advertising, promoting, administering, managing or otherwise making available sports wagering and/or a mobile sports wagering platform in New York.”
Kalshi continues to argue the CFTC’s authority over contracts
Kalshi is arguing in New York, and in other states where it is currently suing gaming regulators, that its sports event contracts receive oversight from the Commodity Futures Trading Commission (CFTC) through the Commodity Exchange Act (CEA). The CEA grants the CFTC exclusive authority to oversee the types of contracts offered by Kalshi.
In its suit in New York, Kalshi also cites the U.S. Constitution’s Supremacy Clause, which “mandates that federal law preempt state law in any field in any field over which Congress has expressly or impliedly reserved exclusive authority.”
Kalshi goes to court in its home state
Kalshi is suing gaming regulators in other U.S. markets over the legality of its sports event contracts and their resemblance to sports betting. The platform is suing regulators in Maryland, New Jersey, Nevada and Ohio, but is now being challenged in its home state.
Kalshi is based in New York, with its principal place of business located in Manhattan. New York is America’s largest regulated online sports betting market and provides Kalshi with access to millions of potential users. New York also draws interest with Kalshi’s market for New York City’s next mayor being the most popular market on the platform for volume at $45.2 million.
NYSGC wants to stop Kalshi’s advertising and promotions
The NYSGC also takes issue with the promotion and advertising of Kalshi in the state. In its cease and desist order, the commission is mandating Kalshi to stop the promotion and advertising of sports event contracts in the Empire State. The concerns are similar to those shared by a group of California tribes that are suing Kalshi in a California court.
The tribes are suing Kalshi and Robinhood for offering “illegal sports betting” through sports event contracts. The tribes are seeking an injunction to prevent Kalshi from offering sports-related event contracts on tribal lands in the state. The injunction is also aimed at preventing Kalshi from advertising its products as “legal in all 50 states” on a national level.
