New York Presses Kalshi Over Advertising and "No House" Claims

New York Attorney General Letitia James has asked a state court to compel Kalshi to comply with a previously issued subpoena, citing possibly misleading marketing practices. According to the Attorney General's petition dated November 2, the company did not submit any of the documents requested on September 25 by the October 5 deadline.

On October 30, Kalshi asked the court to block the subpoena. The company argued that the requested evidence relates to issues already being litigated in the state's consumer protection case. The petition, however, focuses on whether Kalshi, or third parties acting on its behalf, made false statements to consumers. It is examining social media ads claiming that users could pay their rent or replace their work income, as well as influencer promotions highlighting large winnings.

The petition also questions the company's "no house" claim and points to its affiliated market maker, Kalshi Trading, as an example. The Attorney General's Office also cites reports showing that most of the platform's profits come from a small number of sophisticated investors. It has asked the company to submit the documents within 10 days.

This filing is the latest development in the legal battle between Kalshi and New York. In July, a federal judge rejected Kalshi's request for a preliminary injunction against state officials. The company appealed the ruling, and a judge at the Second Circuit Court of Appeals denied the injunction request while the appeal is pending. The report also notes that Sporttrade received approval from the CFTC to operate a derivatives exchange, that a Wisconsin judge rejected a request to block election betting, and that Kalshi's political donations and lobbying activities have drawn attention ahead of the midterm elections.