A federal judge in New York has denied the request from Kalshi to block the state from enforcing its gambling laws against the prediction markets operator while litigation continues, marking another setback for the company in a growing battle over sports event contracts.
Judge Analisa Torres of the Southern District of New York denied Kalshi’s motion for preliminary injunction Tuesday. Torres said New York gambling laws apply to Kalshi’s sports event contracts.
“New York’s gambling laws are designed to protect consumers. Kalshi tried to ignore them. Yesterday, they lost in court,” Gov. Kathy Hochul and Attorney General Letitia James said in a joint statement. “We will continue to hold all gambling platforms accountable to the law — and that includes prediction markets.”
Kalshi continues to argue that its contracts fall under exclusive federal jurisdiction under the Commodity Exchange Act. The ruling adds to the widening split among courts and states over whether prediction markets are federally preempted swaps or gambling products subject to state law.
What the ruling again Kalshi said
The court said Kalshi had not made a clear or substantial showing that it was likely to succeed on the merits.
Torres also rejected Kalshi’s argument that the CEA leaves no room for supplementary state legislation, saying gambling regulation is a traditional state police power and that nothing in the statute prevents New York from requiring compliance with its licensing rules.
The decision is a major contrast to the 3rd Circuit’s New Jersey ruling, where Kalshi prevailed on federal preemption grounds earlier this year. That kind of conflict is exactly what could force a higher court to step in.
New York’s enforcement push
The case is a result of an October cease-and-desist letter from the New York Gaming Commission.
James has argued that prediction markets offering sports contracts are simply gambling by another name and should be subject to the same consumer protections as licensed sportsbooks.
The state’s position is consistent with the broader anti-prediction markets coalition that has formed across state attorneys general and regulators. That coalition has argued that federal preemption should not be used to let event contract platforms sidestep state gambling rules.
Where Kalshi goes next
Kalshi has already appealed the ruling to the Second Circuit, setting up another appellate fight over whether sports event contracts are swaps or gambling.
That appeal now gives the company a chance to reset after losing in district court, but it also means New York remains a live enforcement battlefield for the foreseeable future.
New York further complicates the legal map for prediction markets. Aside from the the 3rd Circuit, a Nevada case in the 9th Circuit resembles New York’s path, and the Commodity Futures Trading Commission continues to sue states that try to regulate the contracts as gambling.
Why it matters for prediction markets
Prediction markets have grown fast enough that the legal question is no longer academic. Platforms like Kalshi and Polymarket now have real volume, real users and real state-by-state consequences if courts continue to split over the rules.
That makes the New York ruling significant even though it is only a preliminary injunction decision. It keeps the state’s gambling laws alive against Kalshi, adds pressure to the company’s compliance strategy and increases the odds that the Supreme Court will eventually have to decide whether state regulators or the CFTC gets the final say.
For now, New York can keep enforcing, Kalshi can keep fighting, and the prediction markets industry gets one more reminder that the legal road to national scale still runs through the courts.
