New York’s latest court filing targets Kalshi’s advertising and “no-house” claims, adding to a growing regulatory and legal scrutiny against the prediction market operator.
New York’s legal fight with Kalshi continues to grow, with Attorney General Letitia James filing a petition in state court seeking a court order to force the company to comply with a previously issued subpoena over potentially deceptive marketing practices.
Elsewhere, Sporttrade has secured CFTC approval to operate a derivatives exchange, a Wisconsin judge has rejected an election-wagering injunction, and Kalshi’s political contributions and lobbying efforts are drawing attention ahead of the midterm elections.
The Big Story: New York AG Seeks to Force Kalshi to Cooperate With Advertising Investigation
In a November 2 petition, the AG’s office alleged that Kalshi failed to produce any documents requested under a September 25 subpoena, despite an October 5 deadline.
The subpoena seeks documents and communications covering several areas of Kalshi’s operations, including:
- Advertising and influencer promotions: Marketing materials, agreements, payments, and trading activity involving individuals or companies hired to promote Kalshi.
- Internal marketing policies: Training materials, guidance and procedures governing advertising and promotional activities.
- Proprietary trading and market making: Records concerning Kalshi’s own trading, market-making and liquidity-provision activities, as well as arrangements with third-party market makers.
- Incentive programs: Documents related to Kalshi’s volume, liquidity-provider, combo and market-maker incentive programs.
- Previous regulatory disclosures: Documents provided to other state or federal regulators concerning the same subjects.
On October 30, Kalshi asked the court to block the subpoena. The company claimed it improperly seeks evidence concerning issues already being litigated in the state’s enforcement action against the exchange.
The November 2 filing focuses on whether Kalshi or third parties acting on its behalf made misleading representations to consumers. That includes influencer promotions showing substantial wins.
The petition cites social media advertisements featuring users claiming they earned enough from Kalshi to cover rent or replace employment income. It also references reports suggesting that a small number of sophisticated traders account for much of the platform’s profits.
The filing also questions the company’s “no house” claims, citing its affiliated market maker, Kalshi Trading.
The AG seeks an order requiring Kalshi to produce responsive documents within 10 days.
New York’s Battle With Kalshi Continues to Grow
The latest petition adds to the growing battle between Kalshi and New York.
In July, a federal judge denied Kalshi’s motion for a preliminary injunction against state officials. The company appealed to the U.S. Court of Appeals for the Second Circuit, where a judge denied its request for an injunction pending appeal.
The following day, James’ office filed a lawsuit in state court, which Kalshi immediately removed to federal court.
The CFTC has also intervened in the broader dispute, suing New York and subsequently issuing an emergency order directing Kalshi to maintain access to its contracts in the state despite potential state enforcement.
Separately, at the end of October, the New York State Gaming Commission sued Kalshi in state court, seeking a court order compelling Kalshi to comply with subpoenas concerning sports contracts, advertising and underage users.
The New York City Council also launched an investigation in August into Kalshi’s marketing practices and those of three other prediction market platforms.
Kalshi’s appeal to the Second Circuit continues, with a hearing set for November 3.
The Daily Wire
Sporttrade Secures CFTC Exchange and Clearinghouse Approval
The prediction market space continues to attract new entrants, with Sporttrade securing CFTC approval to operate as a designated contract market (DCM), completing another major step in its transition from state-regulated sports betting to federally regulated event contracts.
The CFTC’s October 30 designation follows the October 16 registration of Sporttrade DCO LLC as a derivatives clearing organization.
The approval comes approximately nine months after Sporttrade submitted its application. The timeline reflects a broader trend of faster DCM approvals this year, with Novig and ProphetX securing designations in approximately six months, compared with processes that historically could take 18 months or longer.
Sporttrade said it is onboarding broker partners, including Fliff, which plans to route customer orders to the exchange pending regulatory approval. The company expects to introduce its exchange and clearing capabilities in phases.
Sporttrade previously operated a sports betting exchange across five states before shutting down those operations in May to pursue federal regulation.
Wisconsin Judge Rejects Challenge to Election-Wagering Restrictions
A federal judge in Wisconsin has denied a preliminary injunction sought by a radio host who wanted to purchase election prediction contracts without jeopardizing his voting eligibility.
Joseph Giganti Sr., host of The Regular Joe Show, said he intended to purchase Polymarket US contracts tied to Wisconsin’s gubernatorial and congressional elections.
He argued that a July warning from the Wisconsin Elections Commission (WEC), which said voters who wager on election outcomes could face disqualification and potential felony prosecution, violated his First and Fourteenth Amendment rights.
U.S. District Judge Byron Conway denied the request. He concluded that the state’s interest in preventing voter election wagering outweighed the potential harm to Giganti. The judge emphasized that Giganti had not purchased any contracts and therefore faced no immediate risk of losing his vote.
The court acknowledged that it remains unclear whether prediction market contracts qualify as bets under Wisconsin law, leaving that broader question unresolved.
Kalshi Founders Donate More Than $58,000 to CFTC Oversight Subcommittee Chair
Kalshi’s co-founders contributed a combined $58,500 to political committees supporting Sen. Cindy Hyde-Smith (R-Miss.), who chairs a Senate subcommittee that oversees the CFTC.
According to campaign-finance data compiled by Tech Influence Watch, CEO Tarek Mansour and COO Luana Lopes Lara each contributed $25,000 to the Hyde Smith Victory Committee in July. Mansour also contributed $3,500 to her campaign committee and $5,000 to her leadership PAC.
Hyde-Smith chairs the Senate Agriculture Committee’s Subcommittee on Commodities, Derivatives, Risk Management, and Trade, whose jurisdiction includes the CFTC.
Separately, Bloomberg Government reported November 2 that Kalshi hired Empire Consulting Group and founder Mike McKay, who has ties to House Democratic leader Hakeem Jeffries, to lobby on prediction-market and financial issues.
The move comes as the Democrats are expected to take control of the House. Jeffries, the Minority Leader, is likely to be elected as the Speaker of the House.
FanDuel Reportedly Set to Appoint Christian Genetski Permanent CEO
FanDuel is preparing to appoint interim CEO Christian Genetski to the position permanently, effective January 1, according to Front Office Sports.
FOS cited an internal email from Flutter Entertainment CEO Dan Taylor informing employees of the decision. FanDuel declined to comment, but could announce the news during its third-quarter earnings on November 4.
Genetski has served as interim CEO since May, following the departure of Amy Howe. His expected appointment comes amid a turbulent time for FanDuel and parent company Flutter.
FanDuel has faced increased competition from prediction markets and recent scrutiny over its marketing practices.
ARB Interactive Unveils Modo Super-App With Prediction Markets Planned
ARB Interactive, the company behind Modo Casino, is the latest to introduce a super app.
The Modo Super Gaming App combines several products under a single account and wallet. Existing offerings include Social+ gaming (sweepstakes casino games), Modo Arcade, and Modo Rips, which allow users to open collectible-card packs for a chance to obtain rare cards.
The company plans to add prediction markets at a later date.
The expansion represents another example of a sweepstakes gaming operator seeking to diversify its offerings as regulatory scrutiny of dual-currency sweepstakes casinos continues across the United States.
Nova Scotia Weighs Online Gambling Market Expansion
Nova Scotia is reportedly considering expanding its online gambling market after Alberta joined Ontario in July in opening the market to multiple private operators.
According to Global News, provincial Finance Minister John Lohr confirmed that discussions are underway about the province’s future for online gambling. He told reporters that “gaming is in a time of incredible transformation,” but warned the province should “tread very, very carefully.”
As with most Canadian provinces and territories, Nova Scotia currently offers online gambling through one government-authorized and regulated operator. The Atlantic Lottery Corporation operates the province’s platform.
Proponents of moving to a multi-license system point to the fact that most Canadians choose offshore platforms. According to the Atlantic Lottery Corporation’s 2024-25 Annual Report, the regional lottery captures only about 34% of the online gambling market across Nova Scotia, New Brunswick, Newfoundland and Labrador, and Prince Edward Island.
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