A federal judge has denied Kalshi's request to block New York's regulators from implementing gambling laws related to sports contracts. Judge Analisa Torres of the Southern District of New York ruled that the Commodity Exchange Act (CEA) does not supersede state laws governing sports betting, undermining Kalshi's assertion that the Commodity Futures Trading Commission (CFTC) had exclusive control over this area.
The judge dismissed the complaint against the New York State Gaming Commission due to Eleventh Amendment immunity but permitted claims against individual commissioners to advance. She emphasized that both federal regulations and state gambling laws could coexist, citing the savings provision in the CEA and the "Special Rule."
The conflict emerged when Kalshi launched sports event contracts in January 2025 after obtaining self-certification from the CFTC. In October 2025, New York ordered Kalshi to halt actions it categorized as unauthorized wagering, prompting the company to initiate legal proceedings.
Kalshi contended that adhering to CFTC rules and using geolocation should exempt it from state regulations; however, the court rejected these arguments, asserting that compliance with federal regulations does not provide immunity from New York’s laws.
Judge Torres noted, "There is nothing preventing Kalshi from obtaining a license pursuant to New York law and establishing a category of New York market participants that does not discriminate within that New York-resident category."
This ruling contributes to the expanding landscape of legal challenges facing sports prediction markets and could set a precedent for similar cases nationwide. iGaming lawyer Daniel Wallach commented that this decision may lead to broader legal ramifications, potentially resulting in further enforcement actions against Kalshi and related court cases.
