Kalshi loses New York court bid over sports prediction markets

Kalshi has lost a key early fight in its New York case over sports event contracts.

Legal analyst Daniel Wallach said Judge Analisa Torres of the Southern District of New York denied Kalshi’s request for a preliminary injunction. The ruling means New York’s case can continue to the motion-to-dismiss stage instead of being blocked at the start.

Wallach wrote that the decision was a major loss for Kalshi in the financial capital of the U.S. Crypto journalist Eleanor Terrett also noted that Torres, known for her role in the Ripple case, had returned to the center of another major legal fight.

Court weighs state gambling powers

The dispute centers on whether New York gambling laws can apply to Kalshi’s sports event contracts. Kalshi argued that the Commodity Exchange Act gives the CFTC exclusive control over its federally regulated contracts.

The court also found that Kalshi had not made a clear showing that it was likely to win on the merits.

Judge Torres also pointed to the long role of states in gambling oversight. Wallach quoted the court as saying, “The scope of laws regulating gambling and lotteries is clearly a matter of predominantly state concern.”

CFTC authority faces limits

The ruling does not say the full case is over. It only denies Kalshi’s request for early relief. Still, the order rejects a key part of Kalshi’s argument at this stage.

According to Wallach’s thread, the court said the CFTC’s exclusive jurisdiction under the CEA “is not without limits.” The order also said federal law does not require designated contract markets to offer the same contracts nationwide.

That point matters because Kalshi argued that state-by-state limits would conflict with federal access rules. Judge Torres rejected that view for now, saying New York licensing rules may add another duty but are not squarely contrary to federal law.

Prediction market fight widens

The decision lands during a broader battle over prediction markets. The CFTC has sued several states, including New Mexico, to stop state gaming rules from applying to federally regulated prediction market contracts.

As crypto.news also reported, the fight has become a central topic for regulators and the industry. At Consensus Miami, CFTC Chairman Michael Selig said the issue could reach the Supreme Court, as states continue to treat some sports contracts as gambling products.

Gaming groups have also entered the policy fight. U.S. gaming organizations asked Congress to exclude sports and casino-style prediction markets from CFTC oversight through the CLARITY Act.

For Kalshi, the New York ruling adds pressure at a time when sports contracts drive a large share of activity. As crypto.news reported, sports-related contracts recently accounted for about 65% of Kalshi’s total volume, while the company continued to court investors despite lawsuits.