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A New York state court has ordered Kalshi to show cause why it should not comply with an advertising subpoena from Attorney General Letitia James’s office, according to LegalSportsBetting.com.
The Nov. 6 order concerns an investigation into whether the prediction-market company or its paid promoters deceived consumers through advertising. The dispute runs alongside a separate enforcement lawsuit and an advertising subpoena effort by the New York State Gaming Commission.
Attorney general seeks marketing and influencer records
The attorney general’s Nov. 2 petition in New York County Supreme Court says Kalshi had produced nothing in response to a Sept. 25 subpoena. The petition seeks production within 10 days of a court order; that period is the requested deadline, not an established compliance deadline.
The requested records include marketing materials, influencer contracts, payments to promoters and the trades those promoters placed on Kalshi. The subpoena also seeks internal marketing policies and training materials, proprietary trading and market-making records, documents concerning five incentive programs, and information Kalshi supplied to other regulators on those subjects.
According to the petition, social media advertisements promoted Kalshi with claims that winnings covered rent or replaced a paycheck. The petition contrasts those claims with reports that a small group of sophisticated traders earns most of the platform’s profits.
It also challenges Kalshi’s description of its markets as having no house. The petition alleges that Kalshi Trading or an approved professional market maker takes the opposite side of every combo bet. Those assertions are allegations in the subpoena dispute, not findings of consumer deception.
Kalshi contests New York’s enforcement approach
Kalshi disputes that it is a gambling platform. On Oct. 30, the company asked a federal judge to bar James’s office from using the advertising subpoena to gather evidence for the pending enforcement case.
That separate lawsuit, filed July 31, accuses Kalshi of operating an unlicensed gambling business open to users ages 18 to 20, below New York’s legal sports betting age. It seeks a penalty equal to three times Kalshi’s gains.
Gaming Commission pursues a separate advertising inquiry
The New York State Gaming Commission petitioned to enforce its own advertising subpoenas on Oct. 22.
The commission’s rules hold licensed sportsbooks responsible for advertisements made on their behalf, including by affiliates and agents. Affiliates must prominently disclose their relationship with the licensee.
Those rules prohibit false or misleading claims about winning chances, the number of winners or wager terms. They also prohibit describing an offer as free when a customer must risk their own money to use it or withdraw winnings. Licensed operators must retain advertising records for four years.
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Source: As reported by LegalSportsBetting.com.
