- Judge Analisa Torres denied Kalshi’s bid to block New York’s gambling regulators.
- Judge found New York’s gambling laws may apply to Kalshi’s sports event contracts.
- The ruling may shape how prediction markets face state gambling enforcement.
KalshiEX LLC faced a major courtroom setback after U.S. District Judge Analisa Torres denied its request for a preliminary injunction against New York gambling regulators. The July 7 opinion leaves Kalshi without temporary protection from the New York State Gaming Commission while its lawsuit continues.
Judge Torres found that New York’s gambling laws, as applied to Kalshi’s sports event contracts, were not preempted by the Commodity Exchange Act at this stage. The ruling marks a key moment in the wider prediction market fight over whether event contracts are federally regulated derivatives or state-regulated wagering products.
New York Ruling Puts Kalshi’s Sports Contracts Under Pressure
The dispute began after the New York State Gaming Commission sent Kalshi a cease-and-desist letter in October 2025. The regulator accused the company of offering sports event contracts in New York without a sports wagering license.
Kalshi pushed back by arguing that its contracts trade on a federally regulated derivatives exchange and fall under the Commodity Futures Trading Commission’s exclusive authority. However, New York officials rejected that position and maintained that state gambling rules still apply.
As the case moves forward, New York Attorney General Letitia James’ office is expected to file a civil enforcement action against Kalshi in state court. That action is expected to seek restitution, disgorgement, civil penalties, and injunctive relief.
Gaming attorney Daniel Wallach described the ruling as a major loss for Kalshi, as it may affect related cases in other jurisdictions. He also said prediction market platforms could now face pressure to obtain state licenses or restrict access for New York users.
Federal And State Regulators Clash Over Prediction Markets
The case now sits inside a broader national debate over how prediction market products should be classified. Kalshi says event contracts allow users to trade on real-world outcomes, while state regulators view certain sports markets as gambling.
That divide has sharpened as federal rules treat event contracts differently from traditional sports wagers. CFTC materials describe event contracts as instruments tied to future outcomes, while designated contract markets can list contracts through approval or self-certification processes.
The dispute has also drawn attention at the national policy level. At Consensus Miami, CFTC Chairman Michael Selig said the issue could reach the Supreme Court as states continue challenging sports-linked contracts.
Meanwhile, gaming organizations have urged Congress to exclude sports and casino-style prediction markets from CFTC oversight through the CLARITY Act. That push shows how the fight has moved from courtrooms into broader legislative and regulatory debates.
For now, the ruling does not end Kalshi’s lawsuit. Still, Judge Torres’ order gives New York regulators fresh momentum as prediction market platforms expand beyond politics, macroeconomic events, entertainment, sports, and crypto regulation-linked markets.
Related: CFTC Proposes New Prediction Market Rules to Define Allowed Bets
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