Kalshi files same-day appeal after New York court rejects bid to block state gambling enforcement

Kalshi has appealed a New York federal judge’s same-day ruling that lets state gambling officials keep enforcing local laws against its sports-related event contracts. For PSPs and market operators watching this space, the point is simple: the fight over whether these products are federally regulated derivatives or state gambling products is still moving case by case.

1. In a notice filed on Tuesday in the US District Court for the Southern District of New York (SDNY), Kalshi said it would take the case to the US Court of Appeals for the Second Circuit after Judge Analisa Torres denied its motion for a preliminary injunction against officials at the New York State Gaming Commission.
2. Torres found that New York gambling laws, as applied to Kalshi’s sports-event contracts, were not preempted by the US Commodity Exchange Act. The court said Kalshi had not made a “clear or substantial showing” that it was likely to succeed on the merits.
3. The order also pointed to the split elsewhere: some jurisdictions have granted injunctions against state enforcement in similar Kalshi requests, while others have denied them. That is the kind of inconsistency that keeps this market in litigation instead of product planning.
4. Kalshi’s appeal lands in the middle of a wider regulatory fight. In May, the Commodity Futures Trading Commission (CFTC) backed Kalshi in an Ohio federal appeals court case after the platform challenged efforts to restrict its prediction market offerings. The CFTC’s filing came after it had sued five states, including Wisconsin, New York, Arizona, Connecticut and Illinois, to assert jurisdiction over prediction markets.
5. On June 25, Kalshi sued Illinois officials over a state law it said “expressly bans sports event contracts” unless prediction market platforms obtain local licenses. In April, Wisconsin sued Robinhood, Coinbase, Polymarket, Crypto.com, as well as Kalshi, over sports event contracts, alleging the platforms facilitated illegal sports betting. Nevada regulators have also pursued similar actions against Kalshi, Coinbase and Polymarket.

For high-risk operators, this is not just a Kalshi problem. The same regulatory split is now visible across New York, Ohio, Illinois, Wisconsin and Nevada, which means product classification remains jurisdiction-specific and the enforcement picture keeps changing faster than the legal theories do.