A federal judge in the Southern District of New York denied Kalshi’s request for a preliminary injunction, keeping New York’s gambling laws available against the company’s sports-event contracts. Judge Analisa Torres found that, on the current record, the state laws as applied to Kalshi are not preempted by the Commodity Exchange Act.
The ruling lands in a broader fight over prediction markets and event contracts. State gaming regulators say products tied to sporting outcomes belong under gambling laws, while market operators have argued that federal law and the Commodity Futures Trading Commission should control.
Kalshi sued members of the New York State Gaming Commission in October 2025 after the commission sent a cease-and-desist letter on Oct. 24. The company sought an emergency temporary restraining order and an injunction, saying it faced immediate and irreparable harm from the state’s enforcement effort.
Torres rejected the preemption argument. She wrote that the CEA gives the CFTC exclusive jurisdiction over certain swaps on designated contract markets, but that the statute is not without limits and preserves room for other regulators under federal or state law.
In her decision, Torres said New York’s gambling laws, as applied to Kalshi’s sports event contracts, are not preempted by the CEA and that Kalshi had not made a clear or substantial showing that it was likely to succeed on the merits. She also said the company’s harms were largely monetary and that any civil fines could be challenged and vacated if Kalshi ultimately prevailed.
The denial meant the case moved to the motion-to-dismiss stage, according to the reporting. Kalshi also filed an appeal in the U.S. Court of Appeals for the Second Circuit shortly after the ruling.
Governor Kathy Hochul and Attorney General Letitia James said in a joint statement that New York would continue to hold gambling platforms accountable to the law, including prediction markets. They said Kalshi had “lost in court.”
The dispute comes amid a wider state-federal clash over prediction markets. In a May 5 client alert, Steptoe said New York and Wisconsin were the latest states to challenge prediction markets as unlawful gambling, and that Wisconsin followed with suits against multiple platforms including Kalshi, Polymarket US, Crypto.com and Coinbase.
