- A federal judge denied the CFTC’s emergency bid to halt New York’s gambling case against prediction market Kalshi.
- The order reached the docket Aug. 3 and found the agency showed neither likely success on the merits nor irreparable harm.
- New York seeks $100,000 for each unauthorized sports wagering offer plus a penalty of three times Kalshi’s gain.
- The CFTC may renew its request before U.S. District Judge Victor Marrero on Aug. 7.
NEW YORK – A federal judge refused to stop New York from pursuing its gambling case against Kalshi, denying an emergency motion by the Commodity Futures Trading Commission that would have barred state officials from enforcing gambling laws against the exchanges the agency registers.
The Agency Lost On Both Halves Of The Emergency Standard
U.S. District Judge Jed S. Rakoff, sitting in the Southern District of New York, heard argument July 31 and denied the motion without prejudice. Attorney General Letitia James filed the state’s petition in Manhattan that same day. The written order reached the docket Aug. 3.
Rakoff found the commission had not shown a likelihood of success on the merits and had not shown it would suffer immediate, irreparable harm if the state proceeding moved ahead. Denying the motion without prejudice leaves the agency free to ask again.
The motion came inside the commission’s own suit against New York, filed in April in Manhattan federal court. There the agency asked the court to declare event contracts its exclusive province and to enjoin the state permanently from applying its gambling statutes to firms the commission registers.
Chairman Michael S. Selig said at the time that registered exchanges had faced “an onslaught of state lawsuits” aimed at narrowing what Americans can trade. The agency has brought comparable suits against Arizona, Connecticut and Illinois. The dispute has widened as prediction markets now out-trade America’s sportsbooks.
The Petition’s Arithmetic Runs Per Offer, Not Per Bet
The verified petition, sworn July 31 and brought under Executive Law 63(12), asks the state Supreme Court in New York County to permanently enjoin KalshiEX LLC from operating a gambling business without a New York State Gaming Commission license. It also asks the court to order an accounting of every bet placed and every dollar customers lost, and to impose two separate penalties.
One penalty runs under Penal Law 80.10 at three times the company’s gain from the conduct alleged. The second runs under Racing Law 1367(16)(a) at $100,000 for each offer or attempted offer of sports wagering in the state, a penalty tied to each offering rather than to individual wagers. The state also asks for $2,000 in costs under CPLR 8303(a)(6).
The petition sets Kalshi’s own reported numbers against the market it operates in, citing a $22 billion valuation and $178 billion in annualized transaction volume. New York taxes its licensed mobile sports wagering operators at roughly 51% of gross revenue, and those books produced about $2 billion in gross gaming revenue in 2024 while paying more than $1 billion in state taxes.
That license is the line the state draws between regulated online gambling sites for USA players and a platform it says holds none.
The State Invokes The Wire Act And A Three-Year Age Gap
The petition pleads the New York Constitution’s gambling ban and three Penal Law gambling counts, one of them for receiving more than five bets totaling more than $5,000 in a single day. Its eighth cause of action alleges a violation of the federal Wire Act, 18 U.S.C. 1084(a), putting a federal criminal statute at the center of a state proceeding the CFTC argues federal law preempts.
A separate allegation turns on age. Racing Law 1367(1)(j) treats anyone under 21 as a minor for sports wagering, and the petition alleges Kalshi’s member agreement lets bettors open accounts at 18.
The examples the state pleads are not confined to sports. They include contracts on the winner of “Big Brother Season 28” and an eight-candidate market titled “NY-13 Democratic Nominee,” the breadth that makes prediction markets hard to fit inside a single state statute.
Kalshi Has Already Lost Twice In New York
New York’s gaming commission ordered Kalshi to stop on Oct. 24, 2025. The company sued the commission three days later, lost its preliminary injunction bid on July 7 and lost a second injunction request on July 27. Its appeal is docketed in the 2nd U.S. Circuit Court of Appeals. The CFTC may renew its emergency request before Marrero on Aug. 7.