Key facts
- A federal judge ruled against Kalshi, denying its request to block New York state gambling law enforcement.
- The judge stated that New York's gambling laws apply to Kalshi's sports-event contracts and outweigh Kalshi's interests.
- Kalshi is appealing the decision to a higher court.
- New York officials argue that Kalshi's unsupervised platform could harm consumers, particularly those aged 18-24.
- The court found that the Commodity Exchange Act (CEA) does not preempt New York's authority to regulate gambling on prediction markets.
A federal judge has ruled against prediction market operator Kalshi, denying its request to prevent New York from enforcing state gambling laws on its sports-event contracts. US District Judge Analisa Torres stated that New York's gambling laws apply and outweigh Kalshi's interests, and that the federal Commodity Exchange Act (CEA) does not preempt state regulation in this area.
Kalshi is appealing the decision to the US Court of Appeals for the 2nd Circuit. The ruling allows New York to continue enforcing its laws while the litigation proceeds. Governor Kathy Hochul and Attorney General Letitia James issued a joint statement, emphasizing that New York's gambling laws are designed to protect consumers and that all gambling platforms will be held accountable.
Kalshi began offering sports-event contracts in January 2025, which prompted the New York State Gaming Commission to issue a cease and desist order in October 2025. Kalshi argued that its contracts are swaps regulated exclusively by the CFTC, but the court found that federal law leaves room for states to regulate tangential issues. The judge noted that the CFTC's inaction does not prevent states from enforcing their own laws.
In a separate case, the US Court of Appeals for the 3rd Circuit previously ruled that New Jersey cannot regulate sports bets on prediction markets. Kalshi has faced other unfavorable decisions in different circuit courts.