TLDR
- New York AG Letitia James filed a petition asking a court to enforce a September 25 subpoena against Kalshi.
- The subpoena seeks records on influencer marketing, internal policies, proprietary trading, and incentive programs.
- Kalshi missed the October 5 deadline and moved to quash the subpoena on October 30.
- Kalshi argues the subpoena covers issues already part of the state’s enforcement case.
- If the court grants the petition, Kalshi would have 10 days to produce the documents.
New York Attorney General Letitia James wants a court to force Kalshi to hand over records on how it pays influencers, runs its own trades, and rewards active traders. The request came in a petition filed in the state’s ongoing legal fight with the prediction market.
The petition asks the court to enforce a subpoena that James’s office sent to Kalshi on September 25. The company has not produced the documents the state requested.
The core dispute is about who should regulate Kalshi. New York says the company runs an unlicensed gambling business that falls under state law.
Kalshi says its event contracts are not gambling. It argues they fall under the Commodity Futures Trading Commission, the federal regulator for derivatives.
In July, a federal judge denied Kalshi’s request for a preliminary injunction against state officials. Kalshi appealed to the US Court of Appeals for the Second Circuit, which also denied an injunction pending appeal.
The day after that denial, James’s office sued Kalshi in state court. Kalshi quickly moved the case to federal court.
The CFTC has also entered the dispute. It filed its own lawsuit against New York and issued an emergency order requiring Kalshi to keep offering its contracts in the state, despite possible state enforcement.
New York has also gone after Polymarket. In late September, James’s office sued that company, alleging it also offered unlicensed gambling in the state.
What the Subpoena Asks For
The subpoena covers a wide range of Kalshi’s business. A large part of it focuses on advertising and influencer marketing.
The state asked for promotional materials, agreements, and payment records tied to people or companies hired to promote Kalshi. It also asked for the trading activity of those promoters on the platform.
James’s office also wants Kalshi’s internal marketing policies. This includes training materials, internal guidance, and the procedures that govern how the company advertises.
Another section targets proprietary trading and market making. The state asked for records of Kalshi’s own trading, along with its arrangements with third-party market makers.
The subpoena also seeks documents on Kalshi’s incentive programs. These include its volume, liquidity-provider, combo, and market-maker programs.
Finally, the state asked for materials Kalshi had already given to other state or federal regulators. Those requests cover the same areas listed in the rest of the subpoena.
Kalshi Pushes Back
Kalshi had until October 5 to respond to the subpoena. The company did not produce the documents by that date.
On October 30, Kalshi asked the court to quash the subpoena. The company argued the request improperly seeks evidence on issues that are already part of the state’s enforcement action against it.
James’s new petition asks the court to order Kalshi to comply instead. If the court grants the petition, Kalshi would have 10 days from the order to turn over the requested documents.
