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A federal judge in the Southern District of New York has denied Kalshi’s request to stop New York regulators from enforcing state gambling laws against its sports-related event contracts.
The July 7 ruling means the New York State Gaming Commission can continue pursuing enforcement while the case moves forward. Kalshi, a prediction market registered with the Commodity Futures Trading Commission as a designated contract market, had asked for a preliminary injunction after New York challenged its sports contracts.
According to the court, New York law requires companies offering sports wagering to hold a state license, and Kalshi does not have one in New York. The company had self-certified and started listing sports-related event contracts in January 2025. The Gaming Commission later sent Kalshi a cease-and-desist letter in October 2025.
The court also held that the Eleventh Amendment barred the suit against the Gaming Commission itself, leaving only the individual commissioners as defendants in their official capacities.
Why the injunction was denied
The judge assumed, without deciding, that Kalshi’s sports-event contracts could qualify as swaps under the Commodity Exchange Act. Even with that assumption, the court found New York’s gambling laws were not preempted by federal law.
The decision said there was no field preemption because the Commodity Exchange Act includes a savings clause preserving other regulators’ authority. The court also found no conflict preemption, saying Kalshi could seek a New York license and comply with state law.
The ruling further said New York’s laws were not an obstacle to the goals of the federal statute. In discussing the Commodity Exchange Act’s special rule on event contracts, the court cited legislative history indicating Congress wanted to prevent sports-event contracts from being used “solely for gambling.”
The judge also found Kalshi had not shown irreparable harm, and said the balance of equities and public interest weighed against granting an injunction.
What New York readers should watch
For New York players and operators, the immediate takeaway is that the state’s position remains in force for now: sports-related event contracts still face state gambling scrutiny unless a court or regulator says otherwise.
The broader legal fight is still unsettled. The ruling adds to a growing split among courts over whether states can regulate prediction markets offering sports-event contracts. Another issue to watch is the CFTC’s pending rulemaking on the special rule for event contracts, which the agency noticed on June 10, 2026.
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Source: As reported by John Schleppenbach.
