It was a few days before Primary Day when, Zohran Mamdani says, he got a text message from a person he hadn’t spoken to since high school.
“Yo bro, I just put a thousand on you,” the text read. “Please don’t let me down.”
Mamdani, the Democratic front-runner for New York City mayor, didn’t specify where or how his acquaintance put money on him when he recounted the story during an appearance on the Flagrant podcast.
One possible place is Kalshi, an exchange that allows users to purchase contracts that pay out a higher rate if an event or action — such as an election — goes their way.
Kalshi is having a moment in New York and beyond, thanks in part to its flashy advertisements in Times Square, outside Penn Station and on subway trains showing real-time odds for Mamdani and his main rival, former Gov. Andrew Cuomo. The company, which asserts it is not a betting platform, has facilitated more than $63 million in trades on the mayor’s race alone.
The platform’s future in New York, however, may be in doubt.
The head of the New York State Gaming Commission sent Kalshi a letter on Oct. 24 seeking to at least partially shut the company down by accusing it of running an illegal betting operation. The regulator, which has jurisdiction over sports gambling, demanded Kalshi stop offering contracts tied to sporting events, including those that pay out if a team wins a particular game.
It marks the latest in a series of legal battles that will determine the company’s future, with New York and numerous other states arguing Kalshi is violating their gambling laws and, in turn, failing to pay millions of dollars in taxes that legal sportsbooks like FanDuel and DraftKings are forced to pay.
“Kalshi is not licensed by the commission to offer a platform for sports wagering in New York, either at a casino or as a mobile sports wagering operator,” Robert Williams, the commission’s executive director, wrote in his letter.
The legal battle is focused on Kalshi’s sports offerings, over which the Gaming Commission is claiming jurisdiction. But its effects could be broader.
New York’s constitution prohibits betting on things like elections. That could open the door for the state to take additional action if the courts determine Kalshi is a betting platform.
Susan Lerner, executive director of good-government organization Common Cause New York, said the product offered by Kalshi can be damaging to the democratic process.
“The emphasis on the horse race — this one is ahead, this is behind — I think devalues the actual impact of voter’s choices,” she said. “We believe that voters need to be well informed about the policies that candidates support, and an emphasis on this person being more popular than the other discourages people from digging in on the policies and it encourages candidates to dumb it down.”
Under Kalshi’s model, users are able to purchase contracts for anything from a penny to 99 cents that are tied to outcomes of real-world events. Users can purchase as many contracts as they’d like. If the event turns out as predicted, the user is paid $1 per contract, subject to certain fees.
The prices change as more money comes in on one side or another. As of Friday afternoon, a contract contingent on a Mamdani win was going for 94 cents, while a Cuomo wins contract was going for 8 cents.
The odds can swing wildly. Five days before the June 24 Democratic primary election, Mamdani contracts were going for 19 cents. But the morning of the primary, Mamdani was up to 49 cents.
Kalshi’s offerings aren’t just tied to election results or sports. Users spent more than $100,000 predicting whether Mamdani would say words like “homeless” and “socialism” during a recent interview with Jon Stewart on The Daily Show, for example. (Mamdani would go on to say those words during the interview, but not “billionaire” or “immigrant” — two other possibilities Kalshi offered.)
The company is fighting back against the New York regulators, much like it has in New Jersey, Nevada and other states.
Kalshi filed a federal lawsuit on Oct. 27 in an attempt to block the Gaming Commission from enforcing their cease-and-desist order and allow the company to continue operating as usual while the case works its way through the courts.
In its lawsuit, Kalshi argues its contracts are a commodity that can be traded, not unlike soybeans or gold. The state argues the contracts amount to illegal gambling.
The Gaming Commission agreed to pause enforcement of its cease-and-desist demand against Kalshi at least until late November as a judge considers the company’s request to block it.
“These contracts are subject to exclusive federal oversight, and — critically — they are lawful under federal law,” Kalshi’s lawsuit reads.
If it’s gambling, Kalshi would have to comply with regulations in New York and other states. If it’s a commodity, regulation would be up to the federal Commodity Futures Trading Commission, an entity that has taken a hands-off approach under President Donald Trump that includes dropping a lawsuit that challenged the company’s election offerings. Since January, Donald Trump Jr. has been a Kalshi adviser.
Kalshi isn’t the only predictive market exchange. A company called Polymarket is also a giant in the field, but the company paused its U.S. operations amid a battle with the Commodity Futures Trading Commission during President Joe Biden’s time in office.
Polymarket has since acquired a licensed exchange and has signaled it intends to resume business in the United States soon. It has taken in more than $346 million in trades outside the United States on the New York City mayoral race since prior to the primary election.
Karl Sleight, a New York-based attorney who specializes in gambling issues for firm LippesMathias, said he believes there’s a “strong possibility” that Kalshi’s various battles with states will work their way to the Supreme Court.
“ Here we have a collision of the unstoppable force versus the immovable object where you have a new frontier in the world of wagering and who is going to regulate it,” he said.
Mamdani, meanwhile, is well aware of Kalshi.
He paused to peek at a Kalshi billboard near Times Square with live odds showing him at just 23% four days before his primary victory over Cuomo in June. Now the roles are reversed, with Kalshi’s markets showing Mamdani as a strong favorite heading into Tuesday’s general election.
At an Oct. 26 rally at Forest Hills Stadium, Mamdani used Kalshi to warn his supporters against complacency.
“When you see the Kalshi odds that have our chances of victory in the 90s, know this: You are reading the same things that Andrew Cuomo read when he went to sleep each night in June,” he said.
Rich Azzopardi, a spokesperson for Cuomo, said the former governor’s campaign isn’t putting much stock in the predictive market odds, calling it a “system based on vibes that’s not predictive of any election outcome.”
“The old adage was [campaign] signs don’t vote,” he said. “Neither do predictive markets.”
