Judge Denies Kalshi's Bid to Block New York Gambling Enforcement

Richard Janvrin
By: Richard Janvrin
Legal
Judge Denies Kalshi's Bid to Block New York Gambling Enforcement

Photo by Flickr, CC BY 2.0

Key Takeaways

  • A federal judge denied Kalshi's request for a preliminary injunction
  • The ruling found New York's interests outweighed Kalshi's legal arguments
  • Kalshi has appealed as the broader prediction market dispute continues

One of the most notable prediction market platforms, Kalshi, attempted to block the State of New York from enforcing its gambling laws against it, but, following a federal judge's ruling, that request was denied, per Reuters. 

The decision came this past Tuesday from U.S. District Judge Analisa Torres in Manhattan. She said that Kalshi didn't deserve a preliminary injunction because, in her view, the federal Commodity Exchange Act doesn't supersede New York gambling laws when it comes to sports-event contracts. 

Torres also cited the state's interests in preventing gambling addiction and preserving sports integrity. She said it "heavily" outweighed Kalshi's interests.

"Kalshi has not, therefore, made a clear or substantial showing that it is likely to succeed on the merits," Torres wrote. She also mentioned that other federal courts are divided on the issue of prediction markets, per Reuters. 
According to Reuters, a lawyer representing Kalshi declined to comment, but they have appealed Torres' decision to the federal appeals court in Manhattan. 

State Officials Back the Decision

Following Torres' decision, New York Governor Kathy Hochul and Attorney General Letitia James supported it. 
"New ‌York’s ⁠gambling laws are designed to protect consumers," they said. "We will continue to hold all gambling platforms accountable to the law - and that includes prediction markets.”
While Hochul and James support it, the Commodity Futures Trading Commission (CFTC) rejected the view, citing its "exclusive" jurisdiction over prediction markets, as said by Chairman Michael Selig. 

Legal Battle Over Prediction Markets Continues

Prediction markets first boomed in popularity leading up to the 2024 Presidential Election, with accurate polling projecting Donald Trump to defeat Kamala Harris. 
Kalshi and New York's legal battle traces back to October when the state's governing body overseeing sports betting and gambling ordered it to cease operations. 
Then, this past April, New York filed lawsuits accusing Coinbase Financial Markets and Gemini Titan of promoting gambling through event contracts. 
After that, the CFTC sued New York and also filed lawsuits against Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, Rhode Island, and Wisconsin.

Richard Janvrin is a graduate of the University of New Hampshire. He started writing as a teenager before breaking into sports coverage professionally in 2015. From there, he entered the iGaming space in 2018 and has covered numerous aspects, including news, reviews, bonuses/promotions, sweepstakes casinos, legal, and more.

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