Overview
- A federal judge in the Southern District of New York denied Kalshi’s request for a preliminary injunction, so New York’s gambling-law claims will move forward to the motion-to-dismiss stage.
- Judge Analisa Torres found Kalshi had not shown that the Commodity Exchange Act likely preempts New York law, a decision that treats the state’s authority to police gambling as intact.
- Wednesday’s ruling adds to a split in federal courts after the Third Circuit upheld a CEA preemption ruling for Kalshi in New Jersey while other courts in Ohio and Maryland rejected similar preemption claims.
- The decision heightens business risk because sports contracts make up roughly 65% of Kalshi’s trading volume and could force platforms to geofence or restrict service in states that classify those contracts as gambling.
- The CFTC has intervened in related cases and sued some states, so the dispute is likely to produce appeals and may require higher-court resolution to settle whether the CEA displaces state gambling laws nationwide.