Kalshi sues New York regulator over sports betting contracts

Prediction market Kalshi has filed a federal lawsuit against the New York State Gaming Commission after the regulator ordered it to stop offering contracts related to sports results.

In one complaint Kalshi, filed in a federal court in Manhattan, said the state regulator had no control over its operations because it is a registered exchange with the U.S. Commodity Futures Trading Commission (CFTC).

The company argued that its event contracts, including those tied to sports results, are federally regulated derivatives and not betting.

The lawsuit followed a cease-and-desist letter from the New York regulator on Friday, accusing Kalshi of facilitating unlicensed sports betting and threatening “imminent civil penalties and fines.”

It requested a preliminary and permanent injunction from the court, as well as a declaration from the court stating that the New York regulator cannot regulate the platform under the Constitution.

Kalshi says the state’s action exposes the state to a ‘patchwork of regulations’

It also said the state’s actions threaten to subject Kalshi to the patchwork of state regulation that Congress created the CFTC to prevent.

Kalshi is currently registered as a Designated Contract Market (DCM) with the CFTC. This gives the platform the federal right to record and clear derivatives related to real-world events, which could include sports results, the company said in its filing.

Kalshi offers contracts for multiple sporting events, allowing users to bet on whether a team will win or advance in a tournament. Users can also bet on the outcomes of other places on the platform.

The company itself had certified these sports contracts with the CFTC earlier this year.

WHAT A RELAY TO HOLD THE GAME pic.twitter.com/j0Kia3WfFt

— Kalshi Sports (@KalshiSports) October 28, 2025

Kalshi says this falls solely under the jurisdiction of the CFTC

Kalshi argued that it is “subject to the exclusive jurisdiction of the CFTC” under the federal Commodity Exchange Act and said the state’s actions could lead to “immediate and irreparable harm.”

Kalshi added that it is caught between a rock and a hard place. If If she chooses not to comply, she faces civil and criminal liability, but if she does so, she will “suffer significant economic and reputational harm.”

Kalshi sports betting (Source: Kalshi)

Not Kalshi’s first legal battle with state regulators

Kalshi has also sued state gambling regulators in Nevada, Ohio, Maryland and New Jersey over similar circumstances. Kalshi is also defending himself against charges from Massachusetts for allegedly violating sports betting laws.

Kalshi has won preliminary injunctions in the federal courts of New Jersey and Nevada, and victories he says have helped prevent “similar state overreach.”

But a federal judge in Nevada said in April that Kalshi would likely not be harmed if the court did not block the state’s gambling regulator. A month later, a New Jersey federal judge reached a similar conclusion, while a federal court in Maryland in August denied Kalshi’s request to block the state regulator.

Other platforms that offer event contracts, such as Crypto.com and Robinhood Markets, have also taken legal action to defend themselves against state regulators.

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