NEW YORK — US District Judge Analisa Torres rejected a request for a preliminary injunction from Kalshi, a prediction market platform, allowing the enforcement of New York state gambling laws against the company. Kalshi subsequently filed a notice of appeal with the US Court of Appeals for the 2nd Circuit.

Torres ruled that Kalshi's registration with the US Commodity Futures Trading Commission (CFTC) as a designated contract market does not exempt it from state gambling laws. She wrote that "Congress did not intend to preempt all state actions that may relate to DCMs." The judge added that "the CEA [Commodity Exchange Act] leaves room for states to regulate tangential issues that may arise from trading swaps and other financial products on DCMs." Torres further noted that New York laws regulating gaming "complement rather than conflict with federal law" and that "Kalshi has not shown that it is impossible to comply with both New York gambling laws and the CEA." She concluded that "the presumption against preemption, therefore, applies to this case."

New York Governor Kathy Hochul and Attorney General Letitia James issued a joint statement regarding the decision. "New York's gambling laws are designed to protect consumers," they stated, adding, "Kalshi tried to ignore them." The officials said, "Yesterday, they lost in court. We will continue to hold all gambling platforms accountable to the law—and that includes prediction markets."

Kalshi sued the New York State Gaming Commission in October 2025 after the commission issued a cease-and-desist order instructing the company to stop operating an unlicensed mobile sports wagering platform in the state. Kalshi sells short-term contracts that provide payouts if users correctly predict an event's outcome. The company began listing sports-event contracts in January 2025, enabling users to bet on events such as NCAA basketball tournaments and US Open golf tournaments. New York state law prohibits gambling on sports involving any New York-based college team.

Why It Matters

This ruling clarifies the scope of state regulatory authority over financial platforms, even those registered at a federal level. The decision indicates that federal registration as a designated contract market does not automatically preempt state gambling laws, particularly in New York. This impacts how prediction market platforms, such as Kalshi, must navigate various state-level regulations in addition to federal oversight.

The appeal to the 2nd Circuit suggests a continued legal challenge, while the joint statement from Hochul and James signals New York's intention to enforce state gambling laws across all platforms, including prediction markets. This ongoing legal process could further define the jurisdictional boundaries between federal commodity trading oversight and state-level gambling regulation.