New York AG Asks Court to Enforce Kalshi Subpoena on Influencers, Market Makers

Letitia James has not filed a new advertising suit: she wants a state court to enforce a fraud-inquiry subpoena. Kalshi wants a federal judge to stop it as disguised discovery in her gambling case.

• New York Attorney General Letitia James has petitioned New York Supreme Court to compel KalshiEX to comply with a 25 September subpoena, a newsletter reports
• The subpoena, issued under Executive Law section 63(12) and General Business Law sections 349 and 350, seeks marketing, influencer payment and market-making records
• Her office says Kalshi "has failed to produce a single document"; Kalshi asked a federal judge on 30 October to bar the subpoena as an end run around discovery in her gambling suit
• The influencer and "no house" claims are allegations in an investigation, and no court has found that Kalshi misled anyone
• It is New York's second subpoena petition in under two weeks, after the Gaming Commission's

A Petition to Enforce a Subpoena, Not a New Advertising Suit

The petition, received on Monday 2 November, seeks compliance "within 10 days" and asks that Kalshi "pay OAG a penalty", according to The PM Pulse, a prediction market newsletter quoting the filing.

The subpoena came from the office's Investor Protection Bureau for an inquiry into "advertisement and marketing of Your platform to consumers". The office describes "potential fraud by certain players in the prediction market industry, including Kalshi".

What the Attorney General Wants to See

The 11 demands, running from January 2025, cover Kalshi's advertising; agreements with anyone promoting it on platforms including Discord and TikTok; payments to those promoters, including for testimonials; and their own transactions on the platform. They name Tarek Mansour and Luana Lopes Lara, and reach proprietary trading, market maker agreements, rebates and incentive programmes.

Gaming attorney Daniel Wallach, in a post quoted by The Event Horizon newsletter, summarised the petition as probing influencer claims of big wins "despite most users losing", undisclosed paid promotions and "Kalshi's 'no house' claims despite its in-house market maker taking the other side". The PM Pulse says it cites a Wall Street Journal report on undisclosed sponsorships and the National Advertising Division referral of 8 June, made after Kalshi "declined to participate" in a review of influencer disclosures.

Kalshi Calls the Inquiry Discovery by Another Name

Kalshi's fullest answer is a joint letter of 30 October to Judge Vernon S. Broderick in the Southern District of New York, where the 31 July suit sits after Kalshi removed it. Kalshi seeks a protective order or injunction. It says the "same OAG attorneys" served an earlier subpoena the day they sued, asking whether Kalshi "complies with state gaming laws", and that the revision left the demands "largely intact". It objected on 21 August and 5 October, citing burden, First Amendment rights and pre-emption.

The office calls its inquiry "wholly unrelated". The suit targets promoting an unlicensed platform, it says, while the subpoena targets "the potentially false or deceptive content" of advertising, including whether dealings with market makers, "including an affiliate market maker", make Kalshi's claims misleading. It adds that section 63(12) subpoena power "shall not abate or terminate" once it sues, and that the request was unripe because no state court had ordered compliance.

Three New York Fronts, One Federal Setback

On 3 November the Second Circuit denied injunctions pending appeal in Kalshi's case against Gaming Commission officials and two Connecticut appeals, saying the appellants had "failed to make the required showing". The order does not address either subpoena. Kalshi has asked to move the Commission's petition to the Commercial Division, The PM Pulse reports. The federal docket shows no ruling on the letter or the state's remand motion.

The Marketing Claims Are Still Questions, Not Findings

The office's own word is "potential", and the question before the state court is whether Kalshi must answer, not whether it deceived anyone. The cited referral shows how a declined voluntary process can resurface in an attorney general's demand for contracts and payments.

"No House" Is the Claim With the Most Riding on It

Kalshi's FAQ, as quoted by The American Prospect in August, says: "With Kalshi, there is no house. We don't win when our customers lose." A 2021 Kalshi notice describes affiliate Kalshi Trading as "a profit-making enterprise" supporting liquidity, behind informational barriers. The affiliate is disclosed, and its existence does not prove any statement misled. But Utah has already sued on a market-maker theory, and a false advertising inquiry sits further from the swap question than a licensing demand does.

The Timing Now Matters as Much as the Law

Kalshi's best fact is the same-day service; the office's is the statutory text. Its ripeness point is fading: the petition, filed three days later, seeks the very order it said did not exist. If Broderick remands, the protective order request goes with the case; if a state judge orders production first, Kalshi's request may arrive too late.

New York has opened a line of attack that may survive whatever the Second Circuit decides about swaps. Whether it yields any documents depends on which court moves first.