4 ms·

Lawyer here: https://ag.ny.gov/sites/default/files/court-filings/new-york-v-kalshiex-llc-petition-2026.pdf https://ag.ny.gov/sites/default/files/court-filings/

Lawyer here: https://ag.ny.gov/sites/default/files/court-filings/new-york-v-kalshiex-llc-petition-2026.pdf https://ag.ny.gov/sites/default/files/court-filings/new-york... This is the complaint. If you go to page 29 you'll see what they requested. The claim they are trying to prevent them from offering all event contracts nationwide is simply false. The closest anywhere is a claim to enjoin them from violating some federal criminal statutes that they would not be violating if they were not operating in new york illegally (IE do not stop them from operating nationwide). You can also see their is no specific number on the damages. In fact, the only specific number is the request for Kalshi to pay $2000 in costs to the state of NY. The CFTC is, understandably, relying on people not bothering to read it and so has put out an "alternate set of facts".

akerl_ 2mo ago
Edited my earlier comment to point here. Is your assessment that CFTC is pulling the broader impact fully out of the air, or are likely to try to spin the coverage of events in New York for participants outside of New York as counting as interstate commerce?
- DannyBee 2mo ago
  Oh worse than that. The "emergency powers" they speak of are 7 U.S.C. § 12a(9), and they are quite specific. It gives them the authority to direct a registered entity to do a few specific things. None of those things are relevant to here. It's stuff like emergency margin requirements, position limits, etc. Not "violate state law". It gives them no power to enable a registered entity to violate a TRO, or anything like that. Such a power would have to come through pre-emption. The CEA gives them zero authority to preempt state law directly, and any pre-emption would have to be argued to already have occurred under the Commodity Exchange Act. They'll argue it occurs because of their order, but it actually doesn't meet the requirements to do that, so then they'll argue the CEA preempts state law. As you may imagine, this has been argued about before, for a very very very long time. Gambling is core state police power, and has been found so many times. As such, presumptions against pre-emption would apply, etc. Even in the current court that ignores precedent, using an esoteric made-for-specific-situations emergency power statute like this one would to preempt new york/etc (this is not the only case) law would run clearly afoul of the so-called major questions doctrine. Lastly, the current CEA regulations actually ban event contracts that are unlawful under state law (17 CFR 40.11): https://www.law.cornell.edu/cfr/text/17/40.11 https://www.law.cornell.edu/cfr/text/17/40.11 Prohibition. A registered entity shall not list for trading or accept for clearing on or through the registered entity any of the following: ... 1. (1) An agreement, contract, transaction, or swap ... that involves, relates to, or references terrorism, assassination, war, gaming, or an activity that is unlawful under any State or Federal law; So trying to pre-empt state law when the existing regulations clearly don't allow event contracts that are disallowed under state law is ... not likely to succeed. Also note that New York has claimed a violation of the wire act in there, and in particular 18 U.S.C. § 1084(a). This is a federal statute that makes it illegal to transmit sports betting information over the wire (it's okay if it's from a jurisdiction where it's legal to a jurisdiction where it's legal). They have asked the court to enjoin them from violating this. This claim is here because it avoids all the pre-emption issues - it's a federal statute. So New York is also hedging their bets on the state preemption issue. All that said, there is also a CFTC-designated contract market that Kalshi operates, and that they could likely exercise significantly more power over, and New York can order them around less on. But that is likely to end up in the supreme court, and harder to predict. Any other court the answer would be clear - congress doesn't have the authority to regulate purely intra-state gambling, etc.
  - akerl_ 2mo ago
    Wanted to thank you for the highly informative breakdown, especially given we got here by me making the mistake of not pulling up the underlying complaint before commenting.
  - toomuchtodo 2mo ago
    Very high value comments throughout the thread, thank you. What consequences, if any, could the CFTC face for this?
  - speedstyle 1mo ago
    That says contracts about activities which are unlawful under State law, not contracts which are unlawful. Sports is legal, even if sports betting is regulated
tsimionescu 2mo ago
One thing you could perhaps shed some light on - if a TRO were to be requested (it seems none has been?) that would be similar to the permanent order that NY requested, would it have the effect of shutting down Kalshi nationwide unless and until they move their operations to a different state? Would this conceivably bring it legitimately under the jurisdiction of the CFTC? Note that I am not in any way a fan of Kalshi and similar services, and I personally believe they are simply gambling services. Just curious what the law might say for now.
rahimnathwani 2mo ago
The complaint says "within or from New York or to persons in New York". But Kalshi is headquartered in Manhattan, right? So how can they continue to offer all event contracts nationwide without operating 'within or from New York'? Would they have to immediately move their HQ and fire all New York based employees?
- yencabulator 1mo ago
  Can you provide abortion provider locating services from an office in Texas?
  - rahimnathwani 1mo ago
    I was specifically responding to this part of what DannyBee wrote: "The claim they are trying to prevent them from offering all event contracts nationwide is simply false."
    - yencabulator 1mo ago
      As far as I can read it, no such attempt has been made. New York is saying certain things are illegal in New York. It seems New York is not attempting to have any say over what Kalshi does outside of New York, when it does not involve New York residents. Yes, it's mighty inconvenient to have an office in a state that thinks your business activity is illegal. Maybe don't do that.
      - rahimnathwani 1mo ago
        As I said earlier, the complaint says "within or from New York OR to persons in New York" (emphasis mine). This is inconsistent with your statement "It seems New York is not attempting to have any say over what Kalshi does outside of New York, when it does not involve New York residents."
        yencabulator 1mo ago

akerl_ 2mo ago

Edited my earlier comment to point here. Is your assessment that CFTC is pulling the broader impact fully out of the air, or are likely to try to spin the coverage of events in New York for participants outside of New York as counting as interstate commerce?

DannyBee 2mo ago
Oh worse than that. The "emergency powers" they speak of are 7 U.S.C. § 12a(9), and they are quite specific. It gives them the authority to direct a registered entity to do a few specific things. None of those things are relevant to here. It's stuff like emergency margin requirements, position limits, etc. Not "violate state law". It gives them no power to enable a registered entity to violate a TRO, or anything like that. Such a power would have to come through pre-emption. The CEA gives them zero authority to preempt state law directly, and any pre-emption would have to be argued to already have occurred under the Commodity Exchange Act. They'll argue it occurs because of their order, but it actually doesn't meet the requirements to do that, so then they'll argue the CEA preempts state law. As you may imagine, this has been argued about before, for a very very very long time. Gambling is core state police power, and has been found so many times. As such, presumptions against pre-emption would apply, etc. Even in the current court that ignores precedent, using an esoteric made-for-specific-situations emergency power statute like this one would to preempt new york/etc (this is not the only case) law would run clearly afoul of the so-called major questions doctrine. Lastly, the current CEA regulations actually ban event contracts that are unlawful under state law (17 CFR 40.11): https://www.law.cornell.edu/cfr/text/17/40.11 https://www.law.cornell.edu/cfr/text/17/40.11 Prohibition. A registered entity shall not list for trading or accept for clearing on or through the registered entity any of the following: ... 1. (1) An agreement, contract, transaction, or swap ... that involves, relates to, or references terrorism, assassination, war, gaming, or an activity that is unlawful under any State or Federal law; So trying to pre-empt state law when the existing regulations clearly don't allow event contracts that are disallowed under state law is ... not likely to succeed. Also note that New York has claimed a violation of the wire act in there, and in particular 18 U.S.C. § 1084(a). This is a federal statute that makes it illegal to transmit sports betting information over the wire (it's okay if it's from a jurisdiction where it's legal to a jurisdiction where it's legal). They have asked the court to enjoin them from violating this. This claim is here because it avoids all the pre-emption issues - it's a federal statute. So New York is also hedging their bets on the state preemption issue. All that said, there is also a CFTC-designated contract market that Kalshi operates, and that they could likely exercise significantly more power over, and New York can order them around less on. But that is likely to end up in the supreme court, and harder to predict. Any other court the answer would be clear - congress doesn't have the authority to regulate purely intra-state gambling, etc.
- akerl_ 2mo ago
  Wanted to thank you for the highly informative breakdown, especially given we got here by me making the mistake of not pulling up the underlying complaint before commenting.
- toomuchtodo 2mo ago
  Very high value comments throughout the thread, thank you. What consequences, if any, could the CFTC face for this?
- speedstyle 1mo ago
  That says contracts about activities which are unlawful under State law, not contracts which are unlawful. Sports is legal, even if sports betting is regulated

tsimionescu 2mo ago

One thing you could perhaps shed some light on - if a TRO were to be requested (it seems none has been?) that would be similar to the permanent order that NY requested, would it have the effect of shutting down Kalshi nationwide unless and until they move their operations to a different state? Would this conceivably bring it legitimately under the jurisdiction of the CFTC? Note that I am not in any way a fan of Kalshi and similar services, and I personally believe they are simply gambling services. Just curious what the law might say for now.

rahimnathwani 2mo ago

The complaint says "within or from New York or to persons in New York". But Kalshi is headquartered in Manhattan, right? So how can they continue to offer all event contracts nationwide without operating 'within or from New York'? Would they have to immediately move their HQ and fire all New York based employees?

yencabulator 1mo ago
Can you provide abortion provider locating services from an office in Texas?
- rahimnathwani 1mo ago
  I was specifically responding to this part of what DannyBee wrote: "The claim they are trying to prevent them from offering all event contracts nationwide is simply false."
  - yencabulator 1mo ago
    As far as I can read it, no such attempt has been made. New York is saying certain things are illegal in New York. It seems New York is not attempting to have any say over what Kalshi does outside of New York, when it does not involve New York residents. Yes, it's mighty inconvenient to have an office in a state that thinks your business activity is illegal. Maybe don't do that.
    - rahimnathwani 1mo ago
      As I said earlier, the complaint says "within or from New York OR to persons in New York" (emphasis mine). This is inconsistent with your statement "It seems New York is not attempting to have any say over what Kalshi does outside of New York, when it does not involve New York residents."
      - yencabulator 1mo ago