Kalshi has appealed to the U.S. Court of Appeals for the Second Circuit after a federal judge in New York refused to block state gambling regulators from enforcing local law against the company’s sports-event contracts.
In a July 7 order in KalshiEX LLC v. Williams, Judge Analisa Torres denied Kalshi’s motion for a preliminary injunction, finding that New York’s gambling laws, as applied to the contracts, were not preempted by the Commodity Exchange Act and that Kalshi had not shown a likelihood of success on the merits.
The court said Kalshi is a financial services company and a CFTC-certified designated contract market that began listing sports-related contracts on Jan. 22, 2025 after self-certifying them. It also noted that, under New York law, any gambling enterprise offering sports gaming must be licensed by the Gaming Commission, and Kalshi is not licensed.
Torres said the court would not read the CEA’s grant of exclusive jurisdiction as leaving no room for supplementary state legislation, and treated gambling regulation as a traditional state police power. She also said nothing prevented Kalshi from applying for a New York license.
The dispute began after the New York State Gaming Commission sent Kalshi a cease-and-desist letter on Oct. 24, 2025, directing it to stop allegedly operating an unlicensed mobile sports wagering platform. Kalshi responded by suing for declaratory and injunctive relief and arguing that the Commodity Futures Trading Commission has exclusive jurisdiction over the contracts traded on its exchange.
Kalshi filed its notice of appeal the same day Torres ruled, moving the case to the Second Circuit. The appeal follows the order that left New York free to enforce its law while the wider legal question remains unsettled.
In a joint statement, Governor Kathy Hochul and Attorney General Letitia James said Kalshi had tried to ignore New York’s gambling laws and that the state would continue to hold all gambling platforms accountable, including prediction markets.
The ruling also fits a wider split over prediction markets and event contracts. LegalSportsReport said it contrasted with the 3rd Circuit’s New Jersey ruling earlier this year, where Kalshi prevailed on federal preemption grounds, while other courts have reached different conclusions on similar requests.
Yogonet said New York is one of more than a dozen jurisdictions where Kalshi faces regulatory or legal challenges over its sports-related contracts.
