KEY TAKEAWAYS
- New York Attorney General Letitia James asked a Manhattan court to force Kalshi to comply with a Sept. 25 subpoena tied to a deceptive-advertising investigation.
- The subpoena targets influencer payments, internal marketing policies and the role of Kalshi’s in-house and outside market makers.
- The petition opens a consumer-protection front that does not depend on whether federal law preempts New York’s gambling laws.
New York Attorney General Letitia James opened another front in the state’s fight with Kalshi, asking a state court to compel the prediction market operator to hand over records of its influencer marketing and market-making operations.
James filed the petition with the New York County Supreme Court Monday, alleging the prediction markets operator ignored a Sept. 25 investigative subpoena issued in her “ongoing civil investigation into potential fraud and deceptive conduct by Kalshi and other third-parties in the prediction market industry.”
James requests an order requiring Kalshi to produce documents within 10 days, along with a penalty against the company.
The market-maker focus also echoes Utah, where Attorney General Derek Brown named two Susquehanna trading firms as defendants in an illegal gambling suit, arguing liquidity providers function as the house.
Earlier this year, James filed a $36bn suit alleging Kalshi runs an unlicensed sportsbook. Last month, the New York State Gaming Commission (NYSGC) opened its own subpoena fight with the company for allegedly ignoring its requests.
James’s new front on marketing arises alongside the national jurisdictional fight over sports event contracts offered by prediction markets that appears headed for the U.S. Supreme Court.
Does Kalshi act as the house?
James’s new petition focuses on three marketing themes:
- Influencer content showing large wins, including social media ads featuring users who claim Kalshi earnings covered rent or replaced a paycheck
- Creators allegedly failing to disclose sponsorships
- Marketing itself as a peer-to-peer exchange with no house despite its affiliated market maker, Kalshi Trading
“Examining Kalshi’s advertising and marketing materials, the terms of its arrangements with third parties to promote Kalshi’s business, and the role of Kalshi’s in-house and external market makers, is 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 filing reads.
Subpoena reaches into trading programs
The subpoena demands documents and communications covering:
- Marketing and promotion of Kalshi by the company, co-founders Tarek Mansour and Luana Lopes Lara, executives, employees and anyone Kalshi hired to advertise
- Trades placed on the platform by paid promoters, and payments Kalshi made to them
- Training materials, guidance and policies governing marketing
- Proprietary trading, market making and liquidity provision by Kalshi on its own platform
- Arrangements with third-party market makers
- Kalshi’s Volume Incentive Program, Liquidity Incentive Program, Liquidity Provider Program, Combo Incentive Program and Market Maker Program
- Anything Kalshi produced to other state or federal regulators or self-regulatory organizations on the same subjects
Several of those programs already drew scrutiny. Kalshi ended its volume incentives in October amid questions about trading activity on the platform.
New York runs four tracks against Kalshi at once
The new lawsuit joins a crowded New York docket that began in October 2025, when the NYSGC sent a cease-and-desist order and Kalshi sued the regulator days later.
- U.S. District Judge Analisa Torres denied Kalshi a preliminary injunction in July, and a Second Circuit judge refused an injunction pending appeal. The full appeal remains pending.
- James sued Kalshi for $36bn on July 31 after the appellate denial. Kalshi removed the case to federal court, and New York’s remand motion remains pending.
- The Commodity Futures Trading Commission sued New York in April and later issued an emergency declaration ordering Kalshi to keep operating in the state, which New York urged courts to disregard.
- The NYSGC went to court Oct. 22 to enforce July 31 subpoenas on sports contracts, users younger than 21, wagering-style advertising and corporate ownership. A hearing is set for Dec. 14.
James also sued Polymarket in September.
