Prediction market platform Kalshi wasted no time after a New York federal judge denied its motion to block state gambling enforcement, filing an appeal on the same day to the US Court of Appeals for the Second Circuit.
The Court Ruling and Immediate Response
On Tuesday, Judge Analisa Torres of the US District Court for the Southern District of New York (SDNY) rejected Kalshi’s motion for a preliminary injunction against officials at the New York State Gaming Commission. Torres found that New York gambling laws, as applied to Kalshi’s sports-event contracts, were not preempted by the US Commodity Exchange Act. The court ruled that Kalshi had not made a ‘clear or substantial showing’ that it was likely to succeed on the merits.
Hours later, Kalshi filed a notice in the same court stating it would escalate the case to the Second Circuit. The notice of appeal was filed the same day as Torres’s ruling, underscoring the urgency with which the platform is pursuing the matter.
The order also acknowledged that courts across the country have reached conflicting conclusions on nearly identical requests from Kalshi. Some jurisdictions have granted injunctions blocking state enforcement, while others have refused them.
What Is at Stake
The central legal question driving the litigation is whether sports prediction market contracts are federally regulated derivatives under the oversight of the Commodity Futures Trading Commission (CFTC), or state-regulated gambling products subject to local gaming laws. That question now sits with multiple courts simultaneously, with no uniform answer yet in sight.
Gaming law attorney Daniel Wallach, whose Florida firm focuses principally on sports wagering and gaming law, described the ruling on LinkedIn as a ‘major loss for Kalshi in the nation’s financial capital, with likely knock-on effects in other cases, especially Connecticut and other SDNY lawsuits.’
A National Battle Widens
The New York appeal is one front in a growing multi-state regulatory conflict. In May, the CFTC backed Kalshi in an Ohio federal appeals court fight after the platform challenged restrictions on its prediction market offerings. The CFTC had also previously filed suit against five states, including Wisconsin, New York, Arizona, Connecticut, and Illinois, in an effort to assert federal jurisdiction over prediction markets.
On June 25, Kalshi sued Illinois officials over a state law it said ‘expressly bans sports event contracts’ unless platforms obtain local licenses, arguing the statute usurped the CFTC’s authority over federally regulated derivatives markets.
State-level pressure has extended beyond New York. In April, Wisconsin sued Robinhood, Coinbase, Polymarket, Crypto.com, and Kalshi over sports event contracts, alleging the platforms facilitated illegal sports betting. Nevada regulators have similarly pursued actions against Kalshi, Coinbase, and Polymarket.
The stakes are commercially significant: Kalshi’s sports contracts have driven record activity for the platform, even as their legal status remains disputed across the country.
