In a recent ruling, Kalshi suffered a setback in its ongoing legal battle with the New York State Gaming Commission (NYSGC) regarding sports event contracts. On Tuesday, Judge Analisa Torres of the U.S. District Court for the Southern District of New York denied Kalshi's motion for a preliminary injunction, which the prediction market had filed last October.
Kalshi sought the injunction alongside an emergency temporary restraining order (TRO) to continue offering sports event contracts in New York. This legal action followed a cease-and-desist order received in 2025 from the NYSGC, which accused Kalshi of violating state laws by offering these contracts without the necessary gaming license. The cease-and-desist mandated that Kalshi halt all activities related to sports wagering in New York.
In her ruling, Judge Torres outlined the reasons for denying the injunction. Kalshi's legal argument hinges on the claim that its event contracts fall under the exclusive regulatory control of the Commodity Futures Trading Commission (CFTC) as dictated by the Commodity Exchange Act (CEA). Despite this assertion, Torres countered that Kalshi had not demonstrated that compliance with both New York’s gambling laws and the CEA was impossible.
"Kalshi has not shown that it is impossible to comply with both New York gambling laws and the CEA," Judge Torres stated. She added, "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."
The ruling also highlighted that Kalshi's request for a preliminary injunction was insufficient as the company did not successfully prove it was likely to prevail on the merits of the case or that it would incur irreparable harm without the relief. In Kalshi's argument, it claimed the threat of civil and criminal enforcement by the NYSGC posed a significant risk to its operations, including additional costs related to geolocating users in New York. However, Torres remarked that the potential financial repercussions were primarily monetary, stating, "Although the prospect of being subject to criminal prosecution could demonstrate a showing of irreparable injury, Kalshi’s harms ‘are largely monetary.’"
New York Governor Kathy Hochul and State Attorney General Letitia James voiced their support for the ruling soon after it was announced. They issued a joint statement, asserting, "New York’s gambling laws are designed to protect consumers. Kalshi tried to ignore them. Yesterday, they lost in court. We will continue to hold all gambling platforms accountable to the law — and that includes prediction markets."
Following the ruling, Kalshi promptly filed an appeal with the U.S. Court of Appeals for the Second Circuit, adding to its existing legal challenges across North America. Recently, a Michigan judge granted a TRO against Kalshi as sought by State Attorney General Dana Nessel, which requires the company to utilize a third-party geolocation service for users in Michigan. Failing to comply could result in fines of up to $120,000 daily.
Moreover, Kalshi initiated a lawsuit against the Ohio Casino Control Commission on June 29, contesting a $5 million fine imposed for unauthorized sports betting activities. This array of legal actions also includes a case from New Mexico's Attorney General Raúl Torrez, who asserts that Kalshi operates like a traditional sportsbook but lacks the proper licensing in the state.
The implications of the New York ruling could significantly affect Kalshi’s ongoing legal disputes in other jurisdictions, including challenges from officials in Arizona, Kentucky, Massachusetts, Nevada, and Washington. Notably, Arizona was the first to file a criminal complaint against Kalshi, and an Arizona judge previously denied Kalshi's request for a TRO concerning its sports event contracts.
