Judge Denies Kalshi Bid to Block New York Gambling Law

A federal judge in Manhattan denied Kalshi's request for a preliminary injunction on Tuesday, rejecting the prediction market's effort to stop New York from applying state gambling laws to its sports-event contracts.

Southern District of New York Judge Analisa Torres wrote that Kalshi had not made “a clear or substantial showing” that it was likely to succeed on the merits. Torres concluded that the Commodity Exchange Act does not displace New York's gambling laws as applied to the platform's sports-event contracts. She noted the CEA permits states to regulate certain matters related to trading on designated contract markets and cited New York's authority to regulate gambling. Torres added that Kalshi could seek a New York license and that the state requirement was not “squarely contrary to federal law.”

The dispute centers on whether Kalshi's event contracts fall under the federal Commodity Exchange Act and federal oversight by the Commodity Futures Trading Commission, or whether they are subject to state gambling statutes. Kalshi contends federal law preempts state regulation of its sports-related contracts; the New York State Gaming Commission says the contracts violate state gambling law. Kalshi has appealed the ruling to the U.S. Court of Appeals for the Second Circuit.

The case comes amid related enforcement actions in other states. A Michigan judge issued a temporary restraining order last month barring Kalshi from offering sports-related event contracts in that state. Kalshi also sued Illinois over a recent law that creates a regulatory framework for prediction markets and imposes a 0.2% charge on the value of digital asset transactions or services provided to Illinois customers. In April the Commodity Futures Trading Commission sued New York seeking a declaratory judgment that federal law gives the CFTC exclusive authority over event contracts offered by CFTC-registered exchanges.

Attorney Daniel Wallach posted on X that the New York decision is a “major, major loss for Kalshi in the financial capital of the U.S., with likely knock-on effects in other cases.”

Kalshi reports it is the largest prediction market by trading volume, with roughly $33 billion in monthly volume in June, compared with about $13.95 billion combined for a leading rival and its U.S. platform. The company's appeal is pending before the Second Circuit and related suits and regulatory actions remain active in multiple states.