KalshiEX LLC has filed a federal lawsuit against the New York State Gaming Commission (NYSGC), seeking injunctions to prevent the state from enforcing gambling laws that it says are preempted by the Commodity Exchange Act.
The complaint, filed on 27 October in the US District Court for the Southern District of New York, argues that the state’s attempt to regulate Kalshi’s event contracts intrudes upon the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC).
The company, which is also targeting several Commission senior officials in the suit, says New York’s cease-and-desist letter issued on 24 October unlawfully classifies its federally regulated contracts as illegal sports wagering.
According to the filing, the NYSGC warned Kalshi that offering event-based trading without a state sports gaming licence violates state law, and threatened civil penalties and fines.
The letter demanded that the company “cease and desist immediately” from any activities connected to sports wagering in New York.
Kalshi claims that complying with such orders would disrupt its national exchange operations and jeopardise its compliance with CFTC Core Principles.
The complaint asserts that Congress gave the CFTC exclusive jurisdiction over futures and derivatives trading to prevent the “chaos” of conflicting state regulations.
It further argues that by seeking to apply gambling statutes to its federally regulated market, New York is violating the Supremacy Clause of the US Constitution.
The company is requesting both preliminary and permanent injunctions to bar state officials from enforcing or threatening enforcement of those laws against its platform.
Kalshi fights states on multiple fronts
The case marks the latest in a series of legal confrontations between Kalshi and state regulators.
Earlier this year, federal courts in Nevada and New Jersey granted preliminary injunctions blocking similar state actions, finding that federal law preempts state gambling regulations when applied to CFTC-regulated exchanges.
A Maryland court, however, denied Kalshi’s request for similar relief in August, a decision currently under appeal.
Kalshi’s legal position rests on a key distinction: it contends its event contracts are derivative instruments traded between market participants, not wagers placed against a “house.”
The company insists these products serve legitimate financial purposes such as hedging economic risk or aggregating market expectations.
In its filing, Kalshi warns that state interference would undermine the integrity of the national derivatives framework and jeopardise its continued operation as a federally approved exchange.