U.S. District Judge Jed Rakoff denied the CFTC’s emergency request for a temporary restraining order that would have paused New York’s enforcement case against Kalshi. He found the agency had not shown a strong likelihood of success on the merits or a risk of irreparable harm.
The denial was without prejudice. The CFTC can renew its request before Judge Victor Marrero, who was unavailable for the emergency proceeding and is set to hear the preliminary injunction motion on Aug. 7.
The ruling came in a fast-moving fight over New York’s July 31 lawsuit against KalshiEX LLC. The state says the prediction-market platform is running an illegal, unlicensed gambling business and wants the court to stop it from operating in New York, force forfeiture of illegal gains, order restitution to users and impose fines equal to three times the company’s gains.
According to New York’s complaint, Kalshi’s contracts fit the legal definition of gambling because the outcomes are uncertain and outside the bettor’s control or hinge on chance. The state also says Kalshi failed to get a licence from the New York State Gaming Commission, avoided taxes that licensed casinos and mobile sports betting operators pay, and made its markets available to users aged 18 to 20 even though state law requires bettors to be at least 21 for mobile sports betting.
The CFTC’s own case, filed on April 24 in federal court in New York, seeks a declaration that federal law gives the agency exclusive authority over event contracts and asks for a permanent injunction blocking New York from enforcing pre-empted state laws against CFTC-registered markets. The agency says New York has tried to police those markets through cease-and-desist letters and civil suits.
Rakoff’s ruling did not decide whether the CFTC’s pre-emption theory is ultimately correct. But the broader legal fight got another sharp turn in Utah on Aug. 4, when Judge Robert Shelby granted summary judgment to the state, ordered the case closed and held that federal law does not pre-empt Utah’s power to treat Kalshi’s sports-betting contracts as gambling.
Utah’s attorney general said the court held that commodities law does not override the state’s power to ban gambling within its borders, and that gambling has traditionally been regulated by states. The New York Attorney General’s office submitted Shelby’s ruling as supplemental authority in its own case within hours.
The cases now point to a widening split over prediction markets. The Third Circuit has already ruled in Kalshi’s favour on pre-emption, the Sixth Circuit heard arguments last week, and Kalshi’s appeal of the Utah ruling is headed to the Tenth Circuit.
