New York can continue applying state gambling laws to Kalshi sports event contracts after a federal judge rejected an attempt to halt enforcement.
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U.S. District Judge Analisa Torres found that Commodity Futures Trading Commission registration does not remove traditional state authority over gambling.
“Kalshi has not, therefore, made a clear or substantial showing that it is likely to succeed on the merits,” Torres wrote.
Kalshi argued that the Commodity Exchange Act gives the CFTC exclusive control over contracts traded on its federally registered exchange. Torres disagreed, finding no clear congressional intent to prevent states from enforcing gambling laws.
New York can therefore require a gaming licence even when a platform uses federal exchange registration. Geolocation technology also offers no exemption. According to the court, Kalshi can comply with federal requirements while limiting sports contracts in states where it lacks approval.
New York authorities say that approach protects consumers, supports sports integrity and controls unlicensed betting products. Governor Kathy Hochul and Attorney General Letitia James said: “New York’s gambling laws are designed to protect consumers. We will continue to hold all gambling platforms accountable to the law – and that includes prediction markets.”
The dispute followed a New York State Gaming Commission cease and desist notice issued in October 2025. Kalshi had started listing self-certified sports event contracts in January that year.
Torres dismissed claims against the Gaming Commission itself because state agencies hold immunity from such suits. Claims involving individual commissioners can continue.
The decision reaches beyond New York. State regulators across the US argue that sports prediction contracts function like betting, while Kalshi and the CFTC classify them as federally regulated derivatives. Courts have reached different conclusions, leaving the legal boundary unsettled.
Torres will also be familiar to readers who followed the SEC case against Ripple. She issued several major decisions in that long-running cryptocurrency dispute.
New York can enforce licensing and gambling rules while the lawsuit and appeal continue.
Kalshi operates as a CFTC-designated contract market and argues that federal commodities law controls its event contracts.
No. The ruling concerns New York law and the request for temporary court protection.
Kalshi has appealed to the Second Circuit, while claims against individual Gaming Commission members remain active.