Kalshi is pursuing the consolidation of several prediction market lawsuits in New York under a single federal judge. However, state regulators are pushing back, claiming this move is an attempt to evade procedural decisions made by another federal judge.
On May 13, Kalshi submitted a request to Judge Analisa Torres in the Southern District of New York, asking her to classify three recently filed lawsuits as related to its ongoing case against New York regulators.
This request includes the Commodity Futures Trading Commission (CFTC) lawsuit against New York, along with lawsuits from New York Attorney General Letitia James against cryptocurrency exchanges Coinbase and Gemini.
Kalshi contends that all these cases revolve around a central question: whether the Commodity Exchange Act (CEA) takes precedence over New York's state gambling laws when it comes to federally regulated event contracts traded on designated contract markets (DCMs).
In its filing, Kalshi warned of the potential for conflicting orders if different judges rule separately on the same federal preemption issue, particularly since the plaintiffs are seeking the same relief.
The company emphasized the importance of procedural relatedness under Rule 13 of the Rules for the Division of Business Among District Judges. Should the court approve its request, Kalshi indicated it would quickly engage with the involved parties about potential consolidation.
Consolidating these cases could have significant implications for scheduling, procedural order, and which judge will ultimately make key preemption decisions.
Kalshi argued that this consolidation is essential to prevent redundant litigation and inconsistent court rulings, citing a growing divide among courts regarding whether event contracts fall under the CFTC’s exclusive jurisdiction or state gambling laws. The company referenced favorable rulings from courts in Arizona and Tennessee, while also acknowledging conflicting decisions from Nevada and Ohio.
In response, New York regulators issued a strongly worded letter opposing Kalshi's request, accusing the company of attempting to manipulate procedural rules. The Attorney General's office asserted that the request was not about improving efficiency but rather an effort to bypass existing rulings from Judge Victor Marrero, who is handling the Coinbase, Gemini, and CFTC cases.
New York highlighted that Judge Marrero had recently postponed the consideration of consolidation motions until after resolving pending motions to remand the Coinbase and Gemini cases back to state court. The state argued that Kalshi's actions are an attempt to circumvent this process by seeking related-case treatment from a different judge.
Furthermore, New York pointed out that despite Kalshi's filing of related case notices linking the Coinbase and Gemini matters, the CFTC did not seek to relate those cases to Kalshi's existing lawsuit. This omission was deemed significant, suggesting that even federal plaintiffs perceive the cases as procedurally unrelated.
The filing also noted that Kalshi waited almost three weeks after the related cases were assigned to Judge Marrero before submitting its request. During this period, Marrero had already made rulings regarding briefing schedules and the order of motions.