A federal judge denied Kalshi a preliminary injunction against New York gaming regulators. The ruling allows New York to continue enforcing its gambling laws while the lawsuit continues. However, the court left Kalshi free to pursue its broader claims through later proceedings.
Judge Analisa Torres ruled that Kalshi failed to secure temporary protection against New York regulators. She found the current record did not support federal preemption under the Commodity Exchange Act. Therefore, the exchange lost its immediate request for court protection.
Source: X
The lawsuit began after New York issued a cease-and-desist order against Kalshi during October 2025. State regulators argued the company offered sports event contracts without a required wagering license. Meanwhile, New York paused enforcement while the injunction request remained before the court.
Crypto in America journalist Eleanor Terrett reported the decision after the court released its order. Gaming attorney Daniel Wallach called the outcome “a major, major loss.” He also said the ruling could influence Kalshi cases pending in other jurisdictions.
Kalshi argued that the Commodity Futures Trading Commission holds exclusive authority over its federally listed event contracts. The exchange claimed federal oversight overrides conflicting state gambling rules. However, Judge Torres rejected that argument at this preliminary stage.
The ruling does not end the lawsuit or decide the final legal questions. Instead, the case now moves toward the motion-to-dismiss stage before further review. Kalshi may still appeal or ultimately succeed after additional court proceedings.
The decision also highlights growing differences among federal courts handling similar disputes. The Third Circuit previously backed Kalshi in its New Jersey challenge during April. Meanwhile, Maryland denied similar relief, and New York has now reached the same interim result.
Judge Torres previously handled the SEC lawsuit against Ripple involving XRP. Her 2023 decision found programmatic XRP sales did not qualify as securities transactions. That framework later influenced broader regulatory discussions before updated federal crypto rules arrived.
The latest order strengthens New York regulators while Kalshi continues defending its federal jurisdiction claims. Even so, the court did not issue a final ruling on the underlying legal dispute. Future proceedings will determine whether Kalshi ultimately prevails on the merits.
Despite mounting legal challenges, Kalshi reported $31 billion in June trading volume. World Cup activity helped drive that performance as prediction market participation increased. The sector also recorded $8.6 billion in monthly taker volume during April, with Kalshi leading the market.
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