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Judge Rules New York Can Enforce Gambling Laws on Kalshi

• On July 7, 2026, a federal judge denied Kalshi’s request to block New York from enforcing its gambling laws, ruling that the state’s interest in fighting gambling addiction and preserving sports integrity “heavily” outweighs Kalshi’s federal preemption argument. Kalshi appealed the same day.
• This isn’t just a New York story. The CFTC has sued five states (New York, Wisconsin, Arizona, Connecticut, Illinois) to block their enforcement against prediction markets, while at least a dozen states, including Michigan, Illinois, Minnesota, Kentucky, Wisconsin, and Nevada, have sued or moved against Kalshi, Polymarket, Coinbase, Robinhood, or Crypto.com over the same underlying question: are these sports-event contracts financial derivatives or unlicensed sports betting.
• Courts are split. New York’s judge sided with the state. A Minnesota federal judge did too. But in May, the CFTC backed Kalshi in an Ohio appeals court. New York’s Attorney General is now expected to pursue a separate civil enforcement action against Kalshi seeking restitution, disgorgement, and civil penalties.

On July 7, 2026, U.S. District Judge Analisa Torres in Manhattan denied Kalshi’s bid for a preliminary injunction that would have stopped New York from enforcing its gambling laws against the company’s sports-event contracts, according to Reuters (July 8, 2026). Kalshi filed a notice of appeal the same day. The ruling matters, but it’s easy to read it as a self-contained New York story. It isn’t. It’s one data point in a nationwide legal war over who gets to regulate prediction markets, a fight already playing out in more than a dozen states with different judges reaching different conclusions.

What Judge Torres Actually Ruled

The case, KalshiEX LLC v. Williams, turns on a single question: do Kalshi’s sports-event contracts count as federally regulated derivatives under the Commodity Exchange Act (CEA), which would put them under the CFTC’s exclusive authority, or do they fall under New York’s gambling laws, which require a license the company doesn’t have?

Torres sided with New York, and she didn’t rule narrowly. In her order, she wrote that “New York gambling laws as applied to Kalshi’s sports-event contracts are not preempted by the CEA and Kalshi has not, therefore, made a clear or substantial showing that it is likely to succeed on the merits.” She found that New York’s interests in preventing gambling addiction, preserving the integrity of sports, and avoiding a proliferation of unregulated betting contracts “heavily” outweigh Kalshi’s interest in federal preemption and its concern that customers would face “intractable” technology issues if the state’s enforcement moves forward.

Torres also rejected the idea that the CFTC’s jurisdiction crowds out state law entirely. “Given that the power to regulate gambling is a traditional police power exercised by New York, the Court also declines to interpret the CEA’s grant of exclusive jurisdiction as leaving ‘no room for supplementary state legislation,'” she wrote. She pointed out that nothing stops Kalshi from simply applying for a New York gambling license: “Although complying with New York gambling laws imposes an additional regulatory requirement on Kalshi, that requirement is not squarely contrary to federal law.”

One important caveat the judge herself flagged: other federal courts have not reached the same conclusion. Some have sided with Kalshi and blocked state enforcement; New York’s court did not. That split is exactly why this keeps ending up in front of judges, state by state, instead of getting settled once, nationally.

The Reaction

New York Governor Kathy Hochul and Attorney General Letitia James welcomed the ruling in a joint statement: “New York’s gambling laws are designed to protect consumers. We will continue to hold all gambling platforms accountable to the law, and that includes prediction markets.” James’s office is expected to follow up with a separate civil enforcement action against Kalshi in state court, seeking restitution, disgorgement, civil penalties, and an injunction.

The CFTC, which regulates Kalshi at the federal level, disagrees entirely with New York’s reading. Chairman Michael Selig has argued the agency holds “exclusive” jurisdiction over commodity derivatives markets, prediction markets included, and the CFTC has already sued New York directly over its enforcement approach.

Sports and gaming law attorney Daniel Wallach called the ruling a bigger deal than a single-state loss: “Major, major loss for Kalshi in the financial capital of the U.S., with likely knock-on effects in other cases.” He specifically flagged Connecticut’s pending case and other suits in the Southern District of New York as likely to be shaped by this outcome.

This Is Bigger Than New York

New York’s fight with Kalshi is the most visible front, but it’s not the only one, and it’s not even the only front in New York. On October 24, 2025, the New York State Gaming Commission sent Kalshi a cease-and-desist letter demanding it stop offering sports-event contracts without a license, which is what triggered Kalshi’s original lawsuit.

The state separately sued Coinbase Financial Markets and Gemini Titan in April 2026 over their own event-contract products, meaning its crackdown extends well past Kalshi. That same month, New York Attorney General Letitia James joined a bipartisan coalition of 37 other attorneys general in an amicus brief backing a similar lawsuit Massachusetts filed against Kalshi.

Nationally, the picture is messier:

• In Michigan, a judge issued a temporary restraining order in June blocking Kalshi from offering sports-event contracts in the state.
• In Illinois, Kalshi sued the state over a new law imposing a 0.2% charge on event-contract transactions, arguing it conflicts with CFTC oversight.
• In Minnesota, a federal judge sided with state officials who argued prediction markets have exceeded what Congress intended when it created the CFTC’s regulatory framework in 1974.
• In Kentucky, the attorney general sued both Kalshi and rival Polymarket, arguing their contracts are unlicensed sports betting under state law.
• In Wisconsin, the state sued Kalshi alongside Robinhood, Coinbase, Polymarket, and Crypto.com over the same theory.
• In Nevada, regulators have pursued similar action against Kalshi, Coinbase, and Polymarket.

Meanwhile, the CFTC has gone on offense of its own, suing five states (New York, Wisconsin, Arizona, Connecticut, and Illinois) to try to establish that its jurisdiction is exclusive and that states can’t enforce gambling law against CFTC-registered platforms at all. In May, the agency backed Kalshi in a federal appeals court in Ohio, one of the few instances where a court has leaned toward Kalshi’s position.

So the same underlying legal question is currently being litigated in front of different judges in different circuits, with genuinely different outcomes depending on where the case lands.

What Comes Next

Kalshi’s appeal now goes to the Second Circuit, the federal appeals court covering New York, which could uphold Torres’s ruling, reverse it, or send it back with new instructions. Separately, New York’s Attorney General is expected to file a civil enforcement action against Kalshi directly, seeking financial penalties on top of the injunctive relief the state already has from this ruling.

None of that resolves the CFTC’s own suit against New York, which is still pending and asks a federal court to declare that federal law preempts state enforcement across the board. Until one of these cases produces a ruling that sticks on appeal, or Congress or the CFTC issues clearer rules, expect this state-by-state litigation pattern to continue.

How This Impacts Players

If you’re in New York, this ruling doesn’t shut Kalshi down, but it confirms the state can keep enforcing its gambling laws against the platform while the appeal plays out, and it signals New York plans to go after other prediction-market-adjacent products, not just Kalshi. Licensed, state-regulated sportsbooks aren’t affected by any of this; the dispute is specifically about whether CFTC-regulated prediction markets are exempt from state gambling law, not about licensed operators.

The bigger takeaway is that Kalshi’s legal status is not the same from state to state right now, and it’s changing quickly. What’s blocked in Michigan or contested in Illinois may be untouched in another state entirely. If you want to know which licensed, regulated sportsbooks are available to you in New York right now, our New York sports betting guide breaks down your legal options, current bonuses, and what each platform offers.