A federal judge rejected Kalshi’s request to prevent New York’s regulators from enforcing gambling laws for sports-related contracts, stating that federal commodities law does not take precedence over state regulations concerning sports betting.
Judge Analisa Torres of the Southern District of New York concluded that the Commodity Exchange Act (CEA) does not take precedence over New York’s gambling laws, thus rejecting Kalshi’s position that the Commodity Futures Trading Commission (CFTC) held exclusive jurisdiction over the matter.
The court dismissed the complaint against New York State Gaming Commission due to Eleventh Amendment immunity, but allowed the complaint against individual commissioners to be heard. Judge Torres also pointed to the CEA’s savings provision as well as the “Special Rule”, concluding that Congress meant for both federal regulation and state gambling laws to coexist.
This dispute arose when Kalshi introduced sports event contracts in January 2025 after self-certifying them with the CFTC. In October 2025, New York state ordered Kalshi to cease what it defined as unauthorized wagering activities, prompting the company to file a lawsuit.
Kalshi argued that compliance with the CFTC rules and geolocation should exempt them from state regulations, but the court rejected both claims, establishing that compliance with federal authorities did not mean exemption from New York state regulations.
Judge Torres wrote:
There is nothing preventing Kalshi from obtaining a license pursuant to New York law and establishing a category of New York market participants that does not discriminate within that New York-resident category,
The ruling adds to the growing number of legal disputes over sports prediction markets and could influence similar cases across the U.S. iGaming lawyer Daniel Wallach said the decision may trigger wider legal consequences, including additional enforcement actions against Kalshi and related court proceedings.