- A New York state court wants Kalshi to explain why the attorney general’s advertising subpoena should not bind it.
- James’s petition says Kalshi has handed over nothing under the Sept. 25 subpoena and wants the records within 10 days of an order, plus a penalty.
- The inquiry covers influencer pay, ads where users say winnings covered rent, and the company’s pitch that its markets have “no house.”
- Licensed sportsbooks in New York answer for affiliate ads and cannot call offers free when bettors must risk their own money.
NEW YORK – Kalshi must explain to a New York state court why it has not turned over the marketing records Attorney General Letitia James demanded, under a Nov. 6 order to show cause, Law360 reported. James’s office says the prediction market has handed over nothing since the Sept. 25 subpoena, which demands its marketing materials, influencer contracts and payments to promoters.
The Nov. 2 petition, filed in New York County Supreme Court, asks the court to enforce a subpoena from James’s civil investigation into whether Kalshi, or promoters paid by it, deceived consumers in its advertising. It seeks production within 10 days of an order and a penalty.
The inquiry runs beside a July 31 suit accusing Kalshi of running an unlicensed gambling business open to users aged 18 to 20, below the legal age for New York sports betting.
Inside The Subpoena
The demands reach beyond the ads themselves. According to the petition, the subpoena lists marketing campaigns, contracts with influencers and other promoters, the money paid to them and the trades those promoters placed on Kalshi. It also seeks internal marketing policies and training materials, records on proprietary trading and market making, documents on five incentive programs, and what Kalshi told other regulators on the same subjects.
The petition says social media ads promoting Kalshi featured users who said their winnings covered rent or replaced a paycheck, then contrasts those claims with reports that a small number of sophisticated traders earn most of the platform’s profits. It cites a Wall Street Journal report that creators often fail to disclose sponsorships, and a newsletter account of a Discord group paying members to post Kalshi clips.
The “No House” Claim
The petition also challenges Kalshi’s description of its markets as having no house. Kalshi Trading, the company’s affiliated market maker, or an approved professional market maker takes the opposite side of every combo bet, the petition says, putting the share at 100%.
Kalshi’s Response
Kalshi disputes that it is a gambling platform. It asked a federal judge Oct. 30 to bar James’s office from using the subpoena to gather evidence for the pending enforcement case, arguing the requests overlap with issues already in that suit. The July 31 suit asks a court to bar Kalshi from operating without a license and to impose penalties of three times its gains, and it was the backdrop to Kalshi’s New York schools program.
James’s office maintains the advertising subpoena serves a separate inquiry into whether the ads deceived consumers.
A Second Agency Joins
A second New York agency is pursuing Kalshi’s advertising as well. The New York State Gaming Commission, which licenses operators in the state’s legal sports betting market, petitioned the same court Oct. 22 to enforce July 31 subpoenas that include ads describing Kalshi’s products as bets or wagers, according to reports on that filing. The commission says Kalshi has not answered the requests it considers central.
The influencer-disclosure question predates the petition. In June, the National Advertising Division of BBB National Programs said it would refer Kalshi to regulators, including state attorneys general, after Kalshi declined to take part in its inquiry into whether paid influencer and affiliate relationships were clearly disclosed.
Sportsbook Ad Rules
The Gaming Commission’s published advertising rules hold each licensed sportsbook responsible for ads made on its behalf, including by affiliates and agents. Affiliates must prominently disclose their relationship with the licensee. The rules bar false or misleading claims about the chances of winning, the number of winners or the terms of a wager, and they bar calling an offer free when a patron must risk their own money to use it or withdraw winnings.
Two of the petition’s three themes, winnings presented as income and promoters paid without disclosure, have counterparts in those rules. The rules also bar ads that promote excessive betting or imply guaranteed success, and licensees must keep advertising records for four years and stop running any ad the commission directs them to pull.
The commission’s rules are written for its licensees, and James said July 31 that Kalshi holds no New York gaming license.
