TLDR
- A federal judge denied Kalshi’s request to stop New York from enforcing its gambling laws against the company.
- Judge Analisa Torres ruled that state gambling authority is not overridden by federal commodities law.
- New York’s Gaming Commission sent Kalshi a cease-and-desist letter in October 2025 over unlicensed sports contracts.
- The ruling could affect related legal fights involving the CFTC, Coinbase, and Gemini.
- Kalshi still has the option to apply for a New York gambling license.
A federal judge in New York has ruled against Kalshi in its fight to keep offering sports prediction contracts in the state. The decision came from Judge Analisa Torres of the Southern District of New York.
Torres denied Kalshi’s request for a temporary restraining order and a preliminary injunction. Her ruling means New York can continue enforcing its gambling laws against the company’s sports-related contracts.
Kalshi runs a platform where users trade contracts tied to real-world events. Some of these contracts are based on sports outcomes, like which team advances in a tournament or who wins a golf championship.
Why the Court Sided With New York
Kalshi argued that the Commodity Exchange Act gives the Commodity Futures Trading Commission sole authority over its contracts. Under that argument, states would have no power to regulate them.
Judge Torres disagreed. She wrote that gambling regulation has long been handled by individual states, and Congress did not remove that authority when it wrote the federal law.
The court pointed to a savings clause in the statute. That clause was written to preserve state power over gambling, even as federal regulators oversee commodity trading.
Torres also noted a “Special Rule” in the law. It lets the CFTC block contracts tied to activity that is illegal under state law, which the judge said shows Congress expected state and federal rules to work together.
The court also dismissed New York’s Gaming Commission from the lawsuit. It ruled the agency is protected by state sovereign immunity. Claims against individual commissioners are allowed to move forward.
The Path That Led to This Ruling
Kalshi began listing sports contracts with the CFTC in January 2025. New York requires a license from its Gaming Commission for anyone offering sports wagering in the state.
By October 2025, the Gaming Commission sent Kalshi a cease-and-desist letter. It accused the company of running an unlicensed sports wagering platform.
Kalshi responded by suing the Commission, arguing federal law should override the state’s authority. The company also said its use of geolocation technology kept New York residents from placing the sports-related trades in question.
Judge Torres rejected that defense. She wrote that following federal rules does not exempt Kalshi from state licensing requirements, and that geolocation tools do not remove the state’s jurisdiction over the company’s offerings.
Tribal groups also joined the case as outside parties. They argued Kalshi entered the gambling market unfairly and interfered with tribal gaming rights by classifying its sports contracts as commodity trading.
Torres wrote that nothing stops Kalshi from applying for a New York license. She said the company could set up a category for New York users under that license.
Legal analyst Daniel Wallach said the ruling could shape other pending cases. He pointed to CFTC litigation against the New York Attorney General, along with enforcement matters involving Coinbase and Gemini, as areas that could be affected by the outcome.
Wallach also said the decision could influence a similar case in Connecticut, where Kalshi and the CFTC are pursuing a preliminary injunction against state regulators.
