Second Circuit leaves Kalshi’s New York and Connecticut losses in place

The Second Circuit has denied Kalshi’s bid for injunctions pending appeal in disputes with New York and Connecticut, leaving in place lower-court refusals to block enforcement of those states’ gambling laws against the prediction-market operator’s sports-event contracts.

The three-judge panel said Kalshi had “failed to make the required showing that an injunction pending appeal is warranted.” The orders are procedural and do not settle the underlying question of whether the Commodity Exchange Act preempts state gambling regulation of the contracts.

The panel also declined to grant relief to Coinbase in its Connecticut case raising the same legal issues, as reported on Nov. 3. Coinbase offers Kalshi event contracts through its platform as a futures commission merchant.

In New York, Kalshi had sought to stop state officials from enforcing gambling laws while its lawsuit proceeded. The state Gaming Commission had ordered the company to cease offering what it described as an unlicensed mobile sports-wagering platform in October 2025. New York requires entities offering sports wagering to hold a commission licence, which Kalshi did not have.

The Southern District of New York rejected Kalshi’s request for a temporary restraining order and preliminary injunction, concluding that the Commodity Exchange Act did not preempt the state’s gambling laws as applied to the company’s sports contracts. The court also found that Kalshi had not made a clear or substantial showing that it was likely to succeed on the merits. It dismissed the Gaming Commission itself from the case on Eleventh Amendment immunity grounds.

Connecticut’s Department of Consumer Protection sent Kalshi a cease-and-desist letter in December 2025, alleging that it was conducting unlicensed online sports wagering. State law requires online sports-wagering operators to obtain a licence through a master wagering licensee.

The District of Connecticut denied Kalshi’s preliminary-injunction request and subsequently rejected its request for an injunction pending appeal. It held that Kalshi’s sports-event contracts were not swaps under the Commodity Exchange Act, placing them outside the CFTC’s jurisdiction, and concluded that Connecticut’s laws complemented rather than conflicted with federal law.

Kalshi operates a market where users buy and sell event contracts, including contracts on outcomes such as NCAA tournament advancement and the U.S. Open golf champion. It maintains that those products are federally regulated swaps subject to the CFTC, rather than gambling. Courts have reached differing results on that broader issue: the Ninth Circuit allowed Nevada to enforce its laws in August and the Sixth Circuit did the same for Ohio and Tennessee in September, while the Third Circuit ruled in April that New Jersey could not regulate prediction-market sports bets.