Kalshi Loses New York Ruling: Federal Licence Does Not Override State Gambling Law
US District Judge Analisa Torres of the Southern District of New York denied Kalshi's motion for a preliminary injunction on 7 July, ruling that the Commodity Exchange Act does not preempt New York's gambling enforcement. The decision hands state regulators another win and opens a second federal circuit on prediction market law. Kalshi appealed to the Second Circuit the same day.
US District Judge Analisa Torres of the Southern District of New York denied Kalshi's motion for a preliminary injunction on 7 July 2026, in KalshiEX LLC v. Williams — Kalshi's own suit against New York officials, filed in October 2025 after the state sent a cease-and-desist letter alleging Kalshi was offering sports gambling without a New York licence. Torres ruled that the Commodity Exchange Act does not preempt New York's gambling enforcement. Kalshi filed notice of appeal to the Second Circuit the same day. The CFTC's own separate suit against New York, filed in May 2026, remains pending in a parallel docket.
Torres rejected all three preemption theories that succeeded for the CFTC in Arizona in May. Field preemption failed: the CEA does not occupy the entire regulatory field to exclude state law. Conflict preemption failed: Kalshi can comply with both CFTC obligations and New York's gambling law simultaneously. Impossibility preemption failed for the same reason — compliance with both regimes is commercially inconvenient, not legally impossible. The ruling gives New York's Gaming Commission a clear path to pursue enforcement without a federal injunction in the way.
For UK readers, the New York context is relevant because the New York State Gaming Commission operates a licensing regime for sports betting broadly analogous to the UK Gambling Commission's. The Torres ruling shows that a federal derivatives licence does not by itself displace the need for a state gambling licence — a principle that maps directly onto UK regulation, where the FCA and the Gambling Commission operate as separate gatekeepers. Neither Kalshi nor Polymarket holds a Gambling Commission licence, which is why both remain inaccessible to UK customers.
Prediction-market preemption is now active in three federal appellate circuits: the Sixth (Michigan, PI denied June 2026), the Ninth (Arizona, PI granted May 2026), and now the Second (New York, PI denied July 2026). The split between Arizona and the growing body of contrary rulings makes a Supreme Court referral increasingly likely. The question is whether Congress or the courts resolve it first, and whether any ruling arrives before the Minnesota felony ban's August 1 effective date.
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Utah Files Felony Charges Against Kalshi and Its Founders — Second State to Criminally Charge a Platform
Utah filed criminal charges against Kalshi and its two co-founders, Tarek Mansour and Luana Lopes Lara, on October 28 — 13 felonies and a misdemeanour, including a second-degree 'pattern of unlawful criminal activity' count and 12 counts of online gambling promotion. The charges stem from a September sting in which an undercover agent placed 12 sports wagers verified to be in Utah. The CFTC sued Utah the day before to block state enforcement, its tenth such suit. Utah is the second state after Arizona to criminally charge Kalshi, and the first to charge the founders personally. Kalshi called it a 'crazy overreach.'
NBA Names Kalshi and Polymarket Preferred Exchanges — Leaving the NFL Alone in Opposition
The NBA announced on October 26 that it has named Kalshi and Polymarket its 'preferred prediction market exchanges,' signed a non-binding memorandum of understanding with the CFTC on basketball integrity, and expanded its DraftKings deal to include prediction markets — the first league to extend a sportsbook partnership into the category. The exchange deals bar league and team personnel from trading NBA contracts, limit permissible markets, and require sharing suspicious-trading data, in exchange for NBA intellectual property and official data. The NBA joins MLB, the NHL, and MLS as partnered leagues, leaving the NFL as the lone major holdout — and the only league fighting the platforms in court.
CFTC Chair Says Agency Is Watching Prediction Markets for Manipulation Ahead of Midterms
CFTC Chairman Michael Selig said on October 23 that the agency is closely monitoring prediction markets for manipulation ahead of the November 3 midterms, and that it is separately scrutinising oil market trading tied to President Trump's announcements about the war in Iran. Combined midterm open interest on Kalshi and Polymarket stood at $250 million as of October 18, with Kalshi holding 84%. Selig acknowledged the agency often catches political figures trading 'oftentimes after the fact.' The remarks highlight the CFTC's dual role as both the platforms' federal protector and their manipulation watchdog.