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- U.S. District Court Judge Analisa Torres denied Kalshi’s motion for a preliminary injunction
- Kalshi levied a lawsuit against the New York State Gaming Commission this past October
- Kalshi has already appealed the decision
A U.S. District Court Judge has denied a motion from Kalshi for a preliminary injunction against New York.
U.S. District Court for the Southern District of New York Judge Analisa Torres officially denied a motion from Kalshi for a preliminary injunction to halt New York gambling law enforcement during the course of its lawsuit.
“New York’s gambling laws are designed to protect consumers. Kalshi tried to ignore them. Yesterday, they lost in court. We will continue to hold all gambling platforms accountable to the law — and that includes prediction markets,” New York Gov. Kathy Hochul (D) and New York Attorney General Letitia James said in a joint released statement.
Not Preempted by CEA
Kalshi filed a lawsuit against members of the New York State Gaming Commission this past October, just two days after the regulatory body sent a cease-and-desist letter to the prediction market company on Friday, Oct. 24, 2025.
The prediction market operator requested an emergency temporary restraining order and preliminary injunction against the New York State Gaming Commission to avoid “immediate and irreparable harm that would result from Defendants’ unlawful acts.”
However, Judge Torres disagreed with the operator’s assertion that the Commodity Exchange Act (CEA) preempts state gambling laws.
“The Court finds that New York gambling laws as applied to Kalshi’s sports event contracts are not preempted by the CEA and Kalshi has not, therefore, made a clear or
substantial showing that it is likely to succeed on the merits,” Torres wrote in her decision.
According to Torres, the CEA grants the Commodity Futures Trading Commission (CFTC) “exclusive jurisdiction” with respect to “transactions involving swaps” on a DCM, it is not without limits.
“Section 2 specifies that ‘nothing contained in th[e] section shall . . . supersede or limit the jurisdiction at any time conferred on . . . other regulatory authorities under the laws of the United States or of any State.’ 7 U.S.C. § 2(a)(1)(A). This provision evinces Congress’ intent to leave room for states to regulate certain activities that may have otherwise been covered by the CEA,” she wrote.
Without an injunction, Kalshi argues it will face the threat of civil and criminal enforcement by the Gaming Commission, a disruption of its business, additional costs for geolocating the state, and harm to its reputation.
Torres wrote in her decision that Kalshi’s harms are “largely monetary” and any potential civil fines they may fact can be challenged and vacated if Kalshi prevails on the merits.
Kalshi Responds to Motion
Shortly after the decision, Kalshi filed an appeal in the U.S. Court of Appeals for the Second Circuit.
Kalshi’s lawsuit against the New York State Gaming Commission revolves around the central question of who regulates sports event contracts, and prediction markets, in general.
Companies such as Robinhood and Kalshi believe that state regulatory bodies do not have the right to intrude on the government’s “exclusive” authority to regulate prediction market, filing lawsuits in New Jersey, Nevada, and Maryland to defend its practices. These companies believe the CFTC is the only regulatory body that can legally block contracts from being offered to customers.
State gaming regulators maintain the markets need to be beholden to regulations, taxes, and license fees that sports betting and gaming operators are required to follow.
The prediction market companies believe their offerings are not required to comply with state laws, as they have been preempted by the CEA.