New York AG Seeks Court Order to Compel Kalshi Over Influencer Ads and Market Making

New York Attorney General Letitia James asked the New York County Supreme Court on Monday to force Kalshi to comply with a Sept. 25 investigative subpoena tied to a deceptive-advertising probe. The petition demands records about influencer payments, internal marketing policies and the role of Kalshi Trading and third‑party market makers, and requests an order requiring production within 10 days and a penalty against the company.

What the petition targets

The filing opens a consumer‑protection front separate from the state's broader preemption and licensing fight with the prediction market operator. James says the subpoena stems from her "ongoing civil investigation into potential fraud and deceptive conduct by Kalshi and other third‑parties in the prediction market industry." The petition singles out three marketing themes:

• social media ads and influencer content showing large wins, including creators who claim earnings "covered rent or replaced a paycheck";

• creators allegedly failing to disclose sponsorships; and

• marketing that frames Kalshi as a peer‑to‑peer exchange with "no house" despite its affiliated market maker, Kalshi Trading.

The subpoena specifically seeks documents and communications covering marketing and promotion by Kalshi, co‑founders Tarek Mansour and Luana Lopes Lara, executives, employees and anyone Kalshi hired to advertise. It also asks for trades placed on the platform by paid promoters and records of payments made to them.

Market‑making and incentive programmes under scrutiny

James's petition reaches into Kalshi's trading programs and its arrangements with liquidity providers. The subpoena demands material on proprietary trading, market making and liquidity provision by Kalshi on its own platform, plus arrangements with third‑party market makers. It lists Kalshi's named incentive schemes: the Volume Incentive Program, Liquidity Incentive Program, Liquidity Provider Program, Combo Incentive Program and Market Maker Program.

Several of those programmes have already drawn scrutiny: Kalshi ended its volume incentives in October amid questions about trading activity on the platform.

How this fits the wider New York litigation

The marketing subpoena adds to a crowded New York docket. The New York State Gaming Commission sent a cease‑and‑desist order in October 2025 and Kalshi sued the regulator days later. U.S. District Judge Analisa Torres denied Kalshi a preliminary injunction in July, and a Second Circuit judge refused an injunction pending appeal; the full appeal remains pending.

James filed a $36bn suit alleging Kalshi operates an unlicensed sportsbook on July 31 after the appellate denial. Kalshi removed that case to federal court and New York's remand motion is pending. The Commodity Futures Trading Commission sued New York in April and issued an emergency declaration ordering Kalshi to keep operating in the state; New York urged courts to disregard that declaration.

The New York State Gaming Commission returned to court on Oct. 22 to enforce its July 31 subpoenas targeting sports contracts, users younger than 21, wagering‑style advertising and corporate ownership. A hearing on those enforcement efforts is set for Dec. 14. James also sued Polymarket in September.

Enforcement parallels elsewhere

The petition's market‑maker focus echoes actions in other states. In Utah, Attorney General Derek Brown named two Susquehanna trading firms as defendants in an illegal gambling suit, arguing liquidity providers function as the house. James's filing seeks similar documentary evidence to test whether Kalshi or others acted deceptively in advertising or in how markets were supplied with liquidity.

"Examining Kalshi's advertising and marketing materials, the terms of its arrangements with third parties to promote Kalshi's business, and the role of Kalshi's in‑house and external market makers, is critical to OAG's ability to determine whether Kalshi (or others on its behalf) engaged in fraudulent or deceptive conduct and/or made false or misleading statements to consumers in its advertising," the petition states.

The petition asks the court to compel production within 10 days and to impose a penalty if Kalshi does not comply, framing the marketing and market‑making records as central to the Attorney General's civil investigation.