Kalshi has filed a lawsuit in New York federal court on Monday seeking a preliminary injunction, a temporary restraining order, and declaratory relief after the New York State Gaming Commission issued a cease-and-desist order against the prediction market operator. 

The New York regulator said Kalshi was operating as an unlicensed sports wagering platform in the state, the most lucrative sports betting market in the United States, where eight licensed mobile operators generated a $2.29 billion handle in September.

Kalshi argues that only the Commodity Futures Trading Commission (CFTC) has authority over its exchange. In its legal filing, the company said: “This action challenges the State of New York’s intrusion into the federal government’s exclusive authority to regulate derivatives trading on exchanges overseen by the Commodity Futures Trading Commission.”

It added: “The New York State Gaming Commission seeks to prevent (Kalshi) from offering event contracts for trading on its federally regulated exchange. It does so by threatening Kalshi with imminent civil penalties and fines for offering these contracts.”

Kalshi said New York’s position conflicts with the federal derivatives framework. “New York’s attempt to regulate Kalshi intrudes upon the federal regulatory framework that Congress established for regulating derivatives on designated exchanges,” the company wrote. “The state’s efforts to regulate Kalshi are both field-preempted and conflict-preempted. This Court should therefore issue both a preliminary and a permanent injunction, as well as declaratory relief.”

In its cease-and-desist order, the New York State Gaming Commission said: “This letter constitutes a demand by the Commission that Kalshi cease and desist from illegally operating, advertising, promoting, administering, managing, or otherwise making available an unlicensed mobile sports wagering platform in New York State in connection with any sports event.”

The regulator described Kalshi’s contracts as “staking or risking something of value upon the outcome of a contest of chance or a future contingent event.”

Kalshi relies in its filing on past rulings in similar disputes elsewhere. “Earlier this year, federal courts in Nevada and New Jersey granted Kalshi preliminary injunctions to prevent similar state overreach,” the company said. It added that judges there concluded that “because Kalshi is a CFTC-designated DCM, it is subject to the CFTC’s exclusive jurisdiction and state law is field preempted.”

Both Nevada and New Jersey continue to litigate those cases, and Nevada has sought to dismiss Kalshi’s injunction request, with a hearing scheduled for Nov. 14. 

In that proceeding, Magistrate Judge Brenda Weksler said: “Defendants should not be forced to accept [Kalshi’s] conclusion that contracts offered on its DCM have independent real-world consequences and thus, fall under the exclusive jurisdiction of the CFTC.” She also said: “And, given Kalshi’s ability to self-certify contracts, Defendants should not be required to accept as a fait acompli that ‘the CFTC has taken no action to bar Kalshi’s contract on the grounds that they are not swaps.’”

Jurisdictional battles between Kalshi and regulators are ongoing in Nevada, New Jersey, Maryland, and Ohio. New York and other states have warned of potential civil and criminal penalties linked to Kalshi’s operations.