A federal judge has denied Kalshi’s request to block the enforcement of New York’s gambling laws pertaining to sports-related contracts, ruling that federal commodities law does not override state regulations on sports betting. Judge Analisa Torres of the Southern District of New York determined that the Commodity Exchange Act (CEA) does not take precedence over New York's gambling laws, dismissing Kalshi’s argument that the Commodity Futures Trading Commission (CFTC) had exclusive jurisdiction in this matter.
The court dismissed Kalshi’s complaint against the New York State Gaming Commission, citing Eleventh Amendment immunity, but it will allow the complaint against individual commissioners to proceed. Judge Torres referenced the CEA’s savings provision and the "Special Rule" to conclude that Congress intended for federal regulations and state gambling laws to operate concurrently.
The case began when Kalshi launched sports event contracts in January 2025, having self-certified them with the CFTC. In October 2025, New York ordered Kalshi to stop what it deemed unauthorized wagering activities, which led to Kalshi filing a lawsuit.
Kalshi contended that adherence to CFTC rules and geolocation requirements should exempt it from state regulations. However, the court rejected both assertions, establishing that compliance with federal agencies does not equate to an exemption from state laws.
Judge Torres stated, "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 increasing number of legal challenges surrounding sports prediction markets and may have implications for similar cases nationwide. iGaming attorney Daniel Wallach commented that this decision could lead to broader legal ramifications, including further enforcement actions against Kalshi and additional court proceedings.
