Kalshi Loses Bid to Halt New York Gambling Enforcement

Prediction market operator Kalshi has lost its latest battle with US state regulators after a federal judge refused to stop the state of New York from enforcing its gambling laws against the company.  

In a ruling issued earlier this week, Judge Analisa Torres of the US District Court for the Southern District of New York denied Kalshi a preliminary injunction against enforcement action from the New York State Gaming Commission, which oversees New York sports betting.

The case hinges on whether Kalshi's sports-event contracts should be regulated under federal law or whether states may apply their own gambling regulations. Kalshi says that the Commodity Exchange Act (CEA), which applies to markets overseen by the Commodity Futures Trading Commission (CFTC), takes precedence over state gambling laws, but New York argues that the company’s sports event contracts violate gambling law. 

In the ruling, Judge Torres said Kalshi had not shown that it was likely to succeed in proving its argument in this case, that the CEA does not stop states from exercising their powers to regulate gambling, and that being forced to comply with York's licensing requirements does not represent a direct conflict with federal law. 

The ruling, however, is expected to have wider implications as Kalshi and other prediction market apps continue to fight enforcement actions from gambling regulators in multiple states, all of which could be influenced.  

Kalshi remains one of the biggest prediction market operators by trading volume and is actively fighting attempts to restrict its sports event contracts, supported by the CFTC, which has also filed its own lawsuit against New York, arguing that federal law gives the agency exclusive authority over all event contracts traded on exchanges such as Kalshi.  

Michigan restricts Kalshi sports markets during court case 

Meanwhile, in Michigan, Kalshi has been forced to start restricting sports-related markets following a court order temporarily barring it from offering contracts to state residents.   

Users have already begun receiving notifications in the Kalshi app stating that they are unable to open new positions in sports markets, effectively removing the company from the Michigan sports betting market for now. An email sent to customers by the company states that the restrictions are due to a temporary court order and confirms that other prediction markets, such as those linked to weather and world news, remain available.  

The restrictions follow an order issued on June 29 by Ingham County Circuit Court Judge Rosemarie Aquilina, which blocks Kalshi from offering sports-event contracts in the state while legal action is ongoing. That legal action began back in March, when Michigan Attorney General Dana Nessel sued Kalshi, alleging that it is running an unlicensed sports betting platform.  

Kalshi has said it disagrees with the decision of the court and intends to continue contesting the lawsuit. The temporary block on offering sports events contracts, however, will remain in place while the case continues. The next court hearing is scheduled for July 13.