US federal court upholds New York gambling laws, blocks Kalshi
A federal judge has rejected prediction market platform Kalshi’s attempt to stop New York from enforcing its gambling laws, escalating the clash between federal and state regulators over authority in the fast‑growing industry.
On Tuesday, U.S. District Judge Analisa Torres in Manhattan denied Kalshi’s request for a preliminary injunction, ruling that the Federal Commodity Exchange Act does not override New York’s gambling statutes when applied to Kalshi’s sports‑event contracts.
Torres stressed that New York’s interests in curbing gambling addiction, safeguarding sports integrity, and preventing the spread of unregulated contracts “heavily” outweigh Kalshi’s claims of federal primacy and customer technology concerns. “Kalshi has not, therefore, made a clear or substantial showing that it is likely to succeed on the merits,” she wrote, noting that federal courts remain divided on the issue. Kalshi has since appealed to the Second Circuit Court of Appeals.
Kalshi’s trading volume surpassed $100 billion on an annualised basis by 2025, including $2.8 billion during Super Bowl week alone, according to Bid Canvas. Regulators argue that such growth heightens risks of gambling addiction and threatens the integrity of sports.
The Commodity Futures Trading Commission (CFTC), however, maintains that prediction markets are financial instruments requiring uniform national oversight. With circuit splits emerging, the dispute appears headed toward eventual resolution by the Supreme Court.
New York officials welcome ruling
Governor Kathy Hochul and Attorney General Letitia James hailed the decision 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.”
Federal vs. state authority
The CFTC disputes New York’s stance. Chairman Michael Selig insists the agency has “exclusive” jurisdiction over commodity derivatives markets, including prediction markets.
Kalshi and Polymarket, for one, enable users to wager on outcomes ranging from sports to elections. Their popularity surged during the 2024 U.S. presidential election, when real‑time probabilities proved more accurate than polling in forecasting Donald Trump’s victory over Kamala Harris.
Prediction markets have a long and controversial history, from papal succession bets in the 1500s to Wall Street election pools in the 19th century. Modern platforms like the Iowa Electronic Markets, Intrade, Kalshi, and Polymarket continue that tradition, fuelling recurring clashes between regulators and courts over whether such markets are legitimate forecasting tools or simply gambling.
Legal battles escalate
Integrity in sports continues to be a central focus of concern for regulators. They fear that wagering on athletic outcomes could disrupt competition, incentivise match-fixing, and destroy public trust.
Last October, Kalshi sued New York after the state’s gaming commission ordered it to stop offering unlicensed sports contracts. On 21 April, New York also filed lawsuits against Coinbase Financial Markets and Gemini Titan, accusing them of promoting gambling through event contracts. More recently, the CFTC challenged similar state actions in Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, Rhode Island, and Wisconsin.
Just like we saw with the advent of crypto, the use cases for prediction markets, while seemingly narrow in their nascent stages, promise to give rise to myriad products and services that help Americans hedge risk and aggregate information.
— Mike Selig (@ChairmanSelig) July 8, 2026
📺 More on @MorningsMaria 👇 pic.twitter.com/rHhImDODAB
Global patchwork
Outside of the U.S., the European Union, for instance, regulates prediction markets under its MiCA crypto framework, while the U.K. permits betting-style markets. However, this is not the same for Asia. Most prohibit, highlighting how legality depends heavily on regional rules, as reported by several media outlets.
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