Kalshi loses another key legal battle over sports event contracts

Kalshi has suffered another courtroom setback after a federal judge ruled that New York can enforce its sports betting laws against the prediction market's sports event contracts.

The decision follows a similar ruling in Michigan last week, marking the second major legal defeat for Kalshi in just over a week as states continue challenging the company's sports-related offerings.

Kalshi has already confirmed it will appeal, setting up another chapter in what increasingly appears to be a legal battle destined for the US Supreme Court.

BREAKING: Kalshi denied preliminary injunction in crucial Southern District of New York case by Judge Analisa Torres. Major, major loss for Kalshi in the financial capital of the US, with likely knock-on effects in other cases (especially Connecticut and other SDNY lawsuits). pic.twitter.com/pLCobVo21S

— Daniel Wallach (@WALLACHLEGAL) July 8, 2026

New York rejects Kalshi's request

US District Judge Analisa Torres denied Kalshi's request for a preliminary injunction, meaning New York is free to enforce its gambling laws while the litigation continues.

Kalshi had argued that the Commodity Exchange Act gives the Commodity Futures Trading Commission exclusive authority over its federally regulated exchange, preventing individual states from applying their own gambling laws.

The court disagreed.

Judge Torres concluded that while the CFTC has exclusive authority over commodity exchanges, that jurisdiction does not automatically preempt state gambling laws.

"Kalshi has not shown that it is impossible to comply with both New York gambling laws and the CEA," Judge Torres wrote.

The ruling also noted that nothing prevents Kalshi from obtaining a New York sports betting license if it wishes to offer sports-related products in the state.

Another setback after Michigan

The decision comes less than two weeks after a Michigan court ordered Kalshi to block users in that state from accessing sports event contracts.

Together, the rulings represent growing momentum for states arguing that sports event contracts function as sports betting and should be regulated under state gaming laws.

Kalshi maintains that its products are federally regulated financial contracts overseen by the CFTC.

The legal picture remains divided

Despite the losses in New York and Michigan, Kalshi has also secured important legal victories.

The Third Circuit previously ruled in Kalshi's favor in its dispute with New Jersey, finding that the state could not prohibit federally regulated event contracts.

Appeals are also pending in multiple federal circuits, meaning different appellate courts could ultimately reach different conclusions.

That type of circuit split is one of the most common reasons the US Supreme Court agrees to hear a case.

What this means for prediction markets

For now, the legal landscape remains uncertain.

Some states are successfully blocking sports event contracts, while others remain unable to do so because of existing court rulings.

Kalshi has already appealed the New York decision and is expected to seek a stay while the appeal proceeds.

Until a federal appeals court—or ultimately the Supreme Court—provides a definitive answer, prediction markets and state regulators are likely to remain locked in legal battles across the country.