Kalshi Falls Foul of New York Judge Over Sports Prediction Markets
Kalshi has hit another brick wall in New York after a judge blocked its bid to overturn an April ruling against its sports contracts.
The saga stretches back to April, when the state of New York enforced sports-gambling laws against the leading prediction market site.
Kalshi and its regulator, the CFTC, fought back with a lawsuit. However, an N.Y. judge has had his say by denying Kalshi’s bid to block the injunction.
At a Glance:
- Kalshi fought to provide sports event contracts in New York
- N.Y. regulator argues Kalshi breaks state sports betting law
- Kalshi and the CFTC sued New York State in April to force a turnaround
- A New York federal judge has now refused to protect Kalshi from state gaming laws
- Meanwhile, Kalshi enjoying billion-dollar volume on its World Cup markets
Federal judge denies Kalshi’s preliminary injunction request
The Kalshi owners filed a motion and a restraining order against the New York State Gaming Commission in its fight over regulation. Kalshi argued that its sports contracts fall under the CFTC's jurisdiction, not the state gaming regulator's.
However, federal judge Analisa Torres disagreed, arguing that New York’s relatively new sports betting laws apply. The lawsuit against New York will proceed, but Kalshi will not have protection until it is resolved.
“This argument [by Kalshi] lacks merit and misinterprets the authority of Kalshi’s self-certification of its sports-event contracts," the judge's note read. "The agency’s inaction is not proof that the sports-event contracts are regulated by or permissible under the CEA [Commodity Exchange Act] — and the Court has concluded they are not.
"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.”
Ongoing saga of prediction markets vs. the states
The battle over prediction markets stretches back to October 2025. New York warned prediction markets, including Kalshi, that they could not offer sports event contracts without a license.
New York has had legalized sports betting since 2022. However, it is keen to protect regulated operators who pay for mobile and retail licenses.
While Kalshi and others are protected via federal licenses from the CFTC, they can still apply for state gaming licenses. So far, however, they have been reluctant to do so. Kalshi will now appeal to the U.S. Court of Appeals for the Second Circuit.
Kalshi records billions in World Cup trade despite legal setbacks
Kalshi leaped to the top of the prediction markets tree following a year of incoming investment. Its summer has been boosted by a bumper FIFA World Cup. As the quarterfinals loomed, Kalshi was showing a trading volume of $1 billion on the outright winner market alone.
Additionally, a report this month by Macquarie showed that prediction markets as a whole have seen over $50 billion in combined trading volume. That number has been boosted by the World Cup and will further tighten the shackles of state regulators.
