Manhattan Judge Backs New York In High-Stakes Kalshi Gambling Showdown

A federal judge in Manhattan has refused to pull the plug on New York's crackdown on Kalshi, letting the state keep treating the platform's sports-event contracts as unlicensed gambling. The Wednesday order keeps enforcement humming along while the long-running courtroom brawl continues. Attorney General Letitia James and Gov. Kathy Hochul quickly cast the ruling as a win for state consumer protections and a warning shot to anyone pitching risky betting-style products in New York.

Judge Torres Refuses Injunction

Southern District of New York Judge Analisa Torres denied Kalshi’s request for a preliminary injunction, ruling that New York's gambling laws, as applied to the company’s sports-event contracts, are not overridden by the federal Commodity Exchange Act. According to The Block, the court found that Kalshi had not made the "clear or substantial showing" needed to win early relief. Court filings for the case are listed on the docket at Justia.

How This Widens A Court Split

The decision sharpens a growing split among federal courts over whether event contracts on CFTC-registered exchanges qualify as swaps that shut the door on state gambling laws. Legal analysts note that the Third Circuit sided with Kalshi in April, creating a powerful precedent in parts of the country, according to analysis by Norton Rose Fulbright. That kind of disagreement between circuits is exactly the sort of thing that boosts the odds the U.S. Supreme Court eventually steps in.

States Press Ahead With Separate Actions

While the federal courts hash out who is really in charge, states are not waiting around. A Michigan judge recently barred Kalshi from offering sports contracts there while litigation plays out, highlighting just how patchwork the rules have become. Axios Detroit reported on the Michigan order and other state enforcement moves that have limited Kalshi’s sports markets. The Commodity Futures Trading Commission has also sued New York in a separate case asserting federal authority over event contracts, adding yet another layer to the state-versus-feds standoff, according to The Block.

Officials React

Attorney General Letitia James wasted little time celebrating online, saying Kalshi "lost in court" and pledging continued scrutiny of prediction markets. In a post on X, she said she and Gov. Hochul will keep holding gambling platforms accountable. Hochul, for her part, last month signed an executive order that bars state employees from using nonpublic government information to profit on prediction markets, according to a press release from the governor's office.

What’s Next For Kalshi

Kalshi has already appealed the SDNY ruling to the Second Circuit, according to reporting by Cryptopolitan. Legal watchers say the dueling appellate rulings are exactly the sort of split that can lure the Supreme Court into the fray, a dynamic explored in recent analysis from Norton Rose Fulbright. Even as it fights on appeal, the company still has the option to seek a New York gambling license.

For New Yorkers, the upshot is that state regulators can keep imposing gambling-style limits on sports and event contracts while the case winds through the courts. Hoodline previously reported that James joined a 37-state brief opposing Kalshi’s sports markets. Expect more filings, more orders, and a lot more legal fine print in the weeks ahead as this patchwork of rulings shapes how prediction markets work for city residents.