KalshiEX LLC sued New York’s gaming commission Monday, adding to a slew of litigation in which the prediction market platform says states are preempted by federal law from regulating its sports-related offerings.
The derivatives exchange, owned by Kalshi Inc., alleges its sports-event contracts are offered on a federally-designated market under the US Commodities Futures Trading Commission’s “exclusive jurisdiction.” Its offerings that let people trade on the outcome of an event, like who might win the US Open Golf Championship, are federally regulated and subjected to the agency’s sole purview under the Commodity Exchange Act, Kalshi said.
“The text, purposes, and statutory history of the CEA leave no question that Congress sought to preempt state regulation of derivatives on exchanges overseen by the CFTC, known as ‘designated contract markets’ or ‘DCMs,’” said Kalshi’s complaint, filed in the US District Court for the Southern District of New York.
Kalshi wants a preliminary and permanent bar on New York’s ability to crack down on its sports-event contracts. It says the state’s efforts violate the supremacy clause, mandating “that federal law preempt state law in any field over which Congress has expressly or impliedly reserved exclusive authority to the federal government, or where state law conflicts or interferes with federal law.”
The New York State Gaming Commission sent Kalshi a cease-and-desist letter Oct. 24, saying it wasn’t licensed and was illegally offering sports wagering in the state. The letter cited multiple examples which the commission said were sports wagering under New York law, such as “Will <person> win the golf grand slam before <date>?”
But the Commodity Exchange Act lets the CFTC subject Kalshi’s contracts to a 90-day review if they are considered to involve “gaming,” which it hasn’t done. “Unless and until the CFTC takes action on Kalshi’s sports-event contracts—all of which have been self-certified under the CEA—they are authorized under federal law,” its complaint said.
Multiple states’ gaming authorities have told exchanges including Kalshi’s and
A federal judge in Nevada said Kalshi had shown a likelihood of success on the merits of its argument that state gaming law was preempted and would suffer irreparable harm without a preliminary injunction. New Jersey’s district court extended Kalshi similar relief. Maryland denied Kalshi’s mirrored request, splitting with these states.
Citing the letter, New York’s commission said it didn’t have further comment on the lawsuit.
Milbank LLP represents Kalshi.
The case is KalshiEX LLC v. Williams, S.D.N.Y., No. 1:25-cv-08846, complaint filed 10/27/25.
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