Kalshi loses bid as NY gambling laws prevail

A federal judge denied Kalshi’s bid to block New York gambling laws, allowing the lawsuit to proceed and affirming state authority over its sports contracts.

Kalshi, a CFTC-registered prediction market platform, recently suffered a significant legal defeat in the Southern District of New York. Judge Analisa Torres denied Kalshi’s request for a preliminary injunction, ruling that New York’s gambling laws apply to Kalshi’s sports event contracts and are not preempted by the Commodity Exchange Act. This decision allows the lawsuit to proceed to the motion-to-dismiss phase, leaving Kalshi exposed to state-level gambling law claims. The ruling challenges Kalshi’s argument that its federally regulated event contracts should be exempt from state gambling enforcement. Legal experts note that this outcome could influence similar cases in other states and may require Kalshi to adjust its business model or seek state licensing. The broader debate over whether prediction markets fall under state or federal jurisdiction continues, with this decision reinforcing states’ rights to regulate gambling.