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Torres blocks Kalshi
A federal judge in Manhattan, U.S. District Judge Analisa Torres, denied Kalshi’s request for a preliminary injunction that would have blocked New York from enforcing its gambling laws against the company’s prediction markets platform.
“Prediction market platform Kalshi has suffered a legal loss in New York”
Torres ruled that the federal Commodity Exchange Act does not supersede New York’s gambling laws as applied to Kalshi’s sports-event contracts, rejecting Kalshi’s argument that federal law preempts state oversight.
In her decision, Torres wrote that "Congress did not intend to regulate so broadly as to exclude all state gambling laws from regulating transactions involving swaps," and she also said Kalshi had not shown it was impossible to comply with both sets of rules.
The dispute began after the New York State Gaming Commission ordered Kalshi to stop offering unlicensed sports event contracts, and Kalshi responded by suing the state in October.
Kalshi can continue operating in New York for the moment as the case proceeds, even as it appeals the denial.
State leaders hail
New York Gov. Kathy Hochul and Attorney General Letitia James hailed the ruling in a joint statement saying, "New York’s gambling laws are designed to protect consumers. Kalshi tried to ignore them. Yesterday, they lost in court."
The same statement added that, "We will continue to hold all gambling platforms accountable to the law — and that includes prediction markets," as the court battle continues over who regulates sports-event contracts.
Torres also rejected Kalshi’s effort to treat its sports-event contracts like federally regulated commodities "swaps," and she concluded Kalshi had not demonstrated a likelihood of success on the merits.
Kalshi filed a notice of appeal after the decision, and the dispute is now headed to the U.S. Court of Appeals for the 2nd Circuit.
In the background of the broader regulatory fight, the CFTC has argued that it should have authority over prediction markets, while New York regulators have said the platforms are gambling by another name.
What’s at stake
The ruling keeps New York’s licensing framework intact, with the New York State Gaming Commission able to continue treating Kalshi’s sports contracts as subject to state licensing rules.
“A federal judge denied Kalshi’s bid to block New York from enforcing its gambling laws against the prediction markets platform, amid a growing battle between federal and state regulators over authority to police the fast-growing industry”
Under New York law as described in the reporting, any company that offers sports wagering products must get a license from the Gaming Commission, and the cease-and-desist letter sent in October alleged Kalshi was operating an unlicensed mobile sports wagering platform.
Torres also said New York’s interests in preventing gambling addiction, preserving sports’ integrity, and avoiding a proliferation of unregulated contracts "heavily" outweigh Kalshi’s interests.
The decision also leaves room for further legal action by the state attorney general, with the Times Union describing the ruling as opening the way for Letitia James to pursue legal action against the company.
Kalshi’s next steps include appealing the denial and continuing to contest whether its CFTC registration as a designated contract market exempts it from state gambling laws.
