Kalshi CEO Compares Firm to Nasdaq as New York Fight Moves to Federal Court

The removal, explained

New York Attorney General Letitia James filed suit in state court just after midnight on 31 Jul, the earliest point allowed once Kalshi's federal appeals were exhausted, seeking $100,000 per unauthorized wager offer plus restitution and forfeiture of the company's New York gains. Kalshi removed the case to the US District Court for the Southern District of New York within hours. It landed with Judge Analisa Torres, who denied Kalshi's request for a preliminary injunction against state enforcement on 7 Jul and rejected an emergency motion pending appeal on 27 Jul.

Losing twice in front of the same judge, then routing a third case to her, is not an obvious winning move on its face. Two explanations are plausible, and Sandmark has asked Kalshi's counsel to clarify which applies: removal may simply forestall an immediate state-court injunction hearing while the underlying suit proceeds, buying operational time rather than a legal win. Or Kalshi's lawyers may see this case, framed around a $36bn damages claim rather than injunctive relief, as different enough from the earlier preemption fight to warrant a fresh federal read.

The Nasdaq argument

Kalshi Chief Executive Tarek Mansour told CNBC that James's lawsuit "could just as easily be copied and pasted" onto Nasdaq, arguing Kalshi matches traders and charges transaction fees rather than taking the other side of bets, the way a bookmaker does. The comparison is doing real legal work, not just PR: Kalshi's underlying claim is that its status as a CFTC-registered Designated Contract Market makes it federally regulated under the Commodity Exchange Act, preempting state gambling law entirely, the same way securities exchanges answer to the SEC rather than state gaming boards. No appellate court has yet ruled definitively on that preemption question.

A building split, not a settled fight

That's the part the "Kalshi loses another round" framing misses. Kalshi has lost preemption arguments in New York, Maryland and Washington, and in Nevada it agreed on 24 Jul to stop offering sports contracts entirely rather than keep fighting. It has won preliminary injunctions in Minnesota and New Jersey. The Third Circuit sided with Kalshi in April in the New Jersey case; the Second Circuit, which will eventually hear New York's dispute, could either align with that ruling or deepen the split. A circuit split is usually what gets the Supreme Court's attention. Read that way, Kalshi's federal-court strategy across a dozen-plus states looks less like a company that keeps losing and more like one litigating toward a single, final ruling rather than expecting to win each round along the way.

A second front, same week

The state-law fight isn't the only pressure point. Nine Senate Democrats led by Jeff Merkley pressed CFTC Chair Michael Selig this week to restrict wildfire-related prediction contracts on Polymarket, citing arson risk and more than $1.2mn wagered on the January 2025 Los Angeles fires. That's a content-based objection under the CFTC's own pending rulemaking on contracts "against the public interest," a different legal question from the gambling-law fight, but with the same underlying vulnerability: prediction markets don't yet have one settled regulatory home, and states, senators and the CFTC itself are each testing a different lever at once. Selig said the agency would continue defending its authority over prediction markets in court; whether that authority extends to policing contract content like wildfire bets is a separate, open question Sandmark has put to the CFTC directly.

What we're waiting on

Kalshi has not yet responded to questions about its removal strategy or whether it offers any wildfire-linked contracts. The CFTC has not said whether a wildfire restriction is under consideration as part of its current rulemaking. We will update this article as responses arrive.