Kalshi Seeks to Link NY Prediction Market Cases; AG Objects

On May 13, Kalshi asked U.S. District Judge Analisa Torres in the Southern District of New York to treat the Commodity Futures Trading Commission’s suit against New York and Attorney General Letitia James’s suits against Coinbase and Gemini as related to Kalshi’s existing case. Kalshi said the actions all turn on whether the Commodity Exchange Act preempts New York from applying state gambling laws to event contracts traded on designated contract markets.

Kalshi invoked the court’s Rule 13 relatedness standard and warned of a ‘significant risk of conflicting orders’ if different judges separately resolve the federal preemption question. The company said that if Judge Torres deems the matters related, it will promptly confer with counsel in those actions about potential consolidation, which could change briefing schedules, motion sequencing and which judge oversees key rulings.

The filing framed the dispute as a national preemption issue and cited a split in federal court decisions. Kalshi pointed to favorable rulings from the Third Circuit and federal courts in Arizona and Tennessee and acknowledged contrary decisions in Nevada and Ohio.

The New York Attorney General’s office filed an opposition the next day, accusing Kalshi of procedural gamesmanship intended to bypass U.S. District Judge Victor Marrero. The office noted Judge Marrero is overseeing the Coinbase, Gemini and CFTC matters and had postponed consolidation until pending motions seeking remand of the Coinbase and Gemini cases back to state court are resolved.

The AG’s filing said Kalshi waited nearly three weeks after the related cases were assigned to Judge Marrero before submitting a related-case notice to Judge Torres. The office also pointed out that the CFTC filed a related-case notice linking the Coinbase and Gemini actions but did not seek to relate those matters to Kalshi’s suit, a detail the AG described as ‘perhaps most significant.’

If a judge deems the actions related and the cases are consolidated, the schedule for briefs and motions could change and the order in which courts address legal issues could shift. Consolidation would also affect which judge issues rulings that could guide whether state gambling laws apply to prediction markets operating on designated contract markets.

Kalshi runs a market for event contracts that New York regulators have said fall under state anti-gambling laws. The CFTC has asserted federal jurisdiction over event contracts traded on designated contract markets and filed a separate suit against New York. The overlapping filings have produced competing procedural approaches and questions about venue and sequencing in federal court.

The parties are set to brief the court on relatedness and possible consolidation before Judge Torres. Judge Marrero’s pending remand and sequencing orders in the Coinbase and Gemini matters remain active and could influence how the courts proceed on the jurisdictional and preemption issues.