Developing New York Already Knows Kalshi Lets 18-Year-Olds Trade. The Subpoena Fight Is About How Many, and What That Costs

Editor's note: TrueEdge builds odds tools and earns affiliate commissions from licensed sportsbooks, which compete with the exchanges this piece is about. Our standing position is that states should pursue federally registered exchanges through civil process, not criminal charges. A subpoena is civil process. Weigh the conflict.

This week the New York State Gaming Commission asked a state judge in Manhattan to make Kalshi answer the subpoenas it was served in August. According to the petition, which the sports-betting lawyer Daniel Wallach posted on Friday and Covers and Law360 reported, Kalshi has "flatly refused to produce any documents" in response to some of the requests. The petition says those requests are needed "to assess the scope of Kalshi's operations in New York."

There are four categories of records: Kalshi's sports-event contracts, what it offered New Yorkers under 21, advertising that described its products as wagers or bets, and its ownership and corporate structure. The subpoenas went to Kalshi Inc. and KalshiEX LLC on August 6 under Section 104(7) of the Racing, Pari-Mutuel Wagering and Breeding Law. The production deadline was August 14. That date passed ten weeks ago.

The obvious reading is that New York is opening another front against an exchange it has already sued. We think that reading misses what the subpoenas are actually after. New York does not need Kalshi's documents to prove what Kalshi does. The state already proved that from public material in July. What it needs is the numbers, and the numbers determine how large the bill gets.

What the state already has

Read the attorney general's July 31 petition, filed under Executive Law 63(12), next to the subpoena categories and they line up closely. The petition cites Kalshi's own Member Agreement for the allegation that account holders aged 18 to 20 can trade (paragraphs 58 and 70). New York's Racing Law defines a minor, for sports wagering, as anyone under 21. Paragraphs 35 and 36 quote a "legal in all 50 states" post from October 30, 2024 and an Instagram ad: "Hey New York . . . Bet on the NFL, Legal in all 50 states." Paragraph 66 describes an investigator in New York buying four "Yes" contracts on Connecticut against Michigan on April 6 for $1.14 including a six-cent fee.

So the liability case does not depend on what Kalshi hands over. If a court agrees that a sports event contract is a wager under New York law, the age policy is in Kalshi's own terms and the ads are in its own feed. Discovery adds nothing to the "whether."

It adds everything to the "how much." Paragraph 13 asks for an accounting of all bets, restitution, a penalty of three times Kalshi's gain under Penal Law 80.10, and $100,000 for each offer of unauthorized sports wagering under Racing Law 1367(16)(a). Every item there is a multiplication, and New York does not yet know what to multiply. It does not know how many New York accounts there are, how many belong to people under 21, how much those people lost, or how much Kalshi took in fees. The subpoena asks for exactly those figures, and only for sports. "Subpoenas do not seek details of any other category of event contracts, just sports," Wallach wrote in August. He called it the "first government subpoena directed at Kalshi."

What happens without the numbers

Utah shows what a state does when it lacks the count. On October 20, Attorney General Derek Brown priced Kalshi's Utah fees at $30.5 million to $61.1 million, according to the Deseret News. He got there by assuming Utah accounts for 1.1 percent of all Kalshi activity and multiplying by a one- to two-cent fee. As we wrote that day, that range is a formula, not a finding. Brown said so himself: "As we get discovery in the course of this civil complaint, we anticipate having more information."

New York's formula is already much bigger. When the state sued in July, Wallach quoted the attorney general's office as seeking $36 billion in compensatory damages "at a minimum." Whatever the method behind it, a figure built without Kalshi's data will be built from the largest defensible inputs. A company's own records are the usual way a number like that comes down. A company that thought its New York under-21 exposure was small would have an obvious reason to show it. One that refuses has either decided that losing the jurisdiction fight would cost more than any damages figure, or it does not want the number known. We do not know which, and Kalshi has not said. Covers' report included no Kalshi statement, and we found none.

The strongest case for refusing

There is a serious argument for Kalshi's position, and it is not about hiding anything.

It goes like this. Kalshi says it is a federally designated contract market overseen only by the CFTC. Answering a state gambling regulator's subpoena would concede that the state may police it, which is the very question pending in the Second Circuit (docket 26-1835). The CFTC thought the question serious enough to file an emergency motion in Manhattan federal court less than an hour before New York's July petition. On top of that, Kalshi removed the attorney general's case to federal court the same day. A state-court subpoena enforcement proceeding could look like a way to get discovery in a case the state no longer controls. Records about 18- to 20-year-old customers are also exactly what a company should be careful about handing over. "States can't just shut down a federally licensed exchange," Kalshi spokesperson Elisabeth Diana said in July.

That is a coherent position, and on the forum point it is partly right. The commission's investigation and the attorney general's case are separate proceedings, but the records will plainly end up in both.

It still fails on the age question. Kalshi's argument that the state cannot investigate is the preemption argument again, and on July 7 U.S. District Judge Analisa Torres rejected it in federal court on express, field and conflict grounds. The Second Circuit may reverse her. Until it does, the only ruling on the books in New York says the state's gambling law applies. And whatever the federal answer on jurisdiction, whether a market should be open to 18-year-olds is something New York has decided by statute for every licensed operator in the state. A refusal that holds until the Second Circuit rules is a reasonable legal bet. A refusal that leaves a judge looking at an unanswered under-21 request in the meantime carries a cost in public perception that no brief can recover.

What would change our view

If Kalshi's response shows it has already produced the account-level data to the CFTC and offers the commission the same set under a protective order, the refusal is about forum, not facts, and the "it does not want the number known" reading is wrong. If the judge enforces the subpoena and Kalshi appeals rather than producing, the opposite becomes the better reading.

The next date to watch is not in this case at all. It is whenever the Second Circuit rules on Kalshi's appeal, because that ruling decides whether this petition is a discovery fight or a formality. Until then, New York has the law at the district-court level, a cease-and-desist that is a year old today (October 24, 2025), and no numbers. This week's petition is about the numbers.