A federal judge in New York has denied Kalshi’s request to temporarily block state gambling enforcement, marking a setback for the prediction market operator. Thus, Kalshi’s fight with New York regulators continues.
The ruling denies Kalshi’s request for immediate protection. However, the broader case moves forward.
Kalshi has already appealed to the U.S. Court of Appeals for the Second Circuit.
Judge finds no merit in Kalshi’s injunction request
U.S. District Court Judge Analisa Torres, in the Southern District of New York, denied Kalshi’s motion for a preliminary injunction in its lawsuit against the New York State Gaming Commission.
Kalshi had asked the court to stop New York from enforcing its gambling laws against the company’s sports event contracts. The company wanted that protection for the duration of the case.
But Torres reached a different conclusion. New York gambling laws, as applied to those contracts, are not preempted by the Commodity Exchange Act.
In the decision, Torres wrote:
“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.”
That is a key point in a dispute. The fight has drawn attention well beyond one operator. The case centers on a jurisdictional question. Sports event contracts and prediction markets can fall primarily under federal commodities oversight, or state gambling regulators can still act.
New York officials framed the ruling as a validation of the state’s approach. In a joint statement after the decision, Gov. Kathy Hochul and Attorney General Letitia James said:
“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.”
Section 2 and the limits of federal preemption
Torres also pointed to statutory language. In her view, it does not wipe away state authority. Quoting the decision, she pointed to Section 2. The provision states:
“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.”
That reading cuts against Kalshi’s argument. Federal law, the company contends, should shield its sports event contracts from New York enforcement during the case.
The immediate impact on Kalshi in New York
Kalshi did not secure an order stopping New York gambling law enforcement, and the lawsuit continues.
Without an injunction, Kalshi argued, it would face potential civil and criminal enforcement actions, business disruption, geolocation costs, and reputational harm.
Torres rejected that argument, calling the alleged harms largely monetary. Any civil fines could be challenged and vacated, she added. That would depend on Kalshi ultimately winning the case.
The dispute traces back to a cease-and-desist letter. The New York State Gaming Commission sent it to Kalshi on Oct. 24, 2025. Kalshi later filed suit in October, and the case has since become part of the broader national debate over prediction markets tied to sports.
Robinhood is also mentioned among the operators involved in the broader conversation around these products. This particular ruling, though, specifically addressed Kalshi’s request for a preliminary injunction.
What comes next
Kalshi filed an appeal shortly after the decision, sending the case to the Second Circuit. Will the appeals court see the balance between federal commodities law and New York gambling enforcement differently? That’s the major question at the moment.
In the meantime, New York remains one of the key battlegrounds in the ongoing fight over sports event contracts and prediction markets. In the coming days, New Yorkers should watch the appeal closely. The case remains active, and further enforcement steps could still follow.
As reported by Sports Betting Dime
