Judge Analisa Torres Rules Against Kalshi in New York Gambling Case

Federal Judge Analisa Torres, widely recognized for overseeing the SEC v. Ripple lawsuit, has ruled against prediction market platform Kalshi in a closely watched legal battle involving New York gambling laws. The decision denies Kalshi’s request for a preliminary injunction, allowing New York regulators to continue enforcing state gambling rules against the company’s sports-related event contracts.

The ruling marks a significant setback for Kalshi, which argued that its sports event contracts are federally regulated by the U.S. Commodity Futures Trading Commission (CFTC) under the Commodity Exchange Act (CEA). As a designated contract market (DCM), Kalshi claimed its contracts should be exempt from state gambling laws and sought court protection through a temporary restraining order and preliminary injunction.

Judge Torres rejected that argument, concluding that New York’s gambling laws are not preempted by the CEA in this case. The lawsuit will now move forward, strengthening the state’s position in its dispute with the prediction market operator.

New York Attorney General Letitia James is expected to pursue a civil enforcement action against Kalshi, seeking restitution, disgorgement of profits, civil penalties, and injunctive relief. Legal experts say the ruling could have broad implications for the prediction market industry. Sports betting attorney Daniel Wallach described the decision as a major loss for Kalshi, noting it may influence similar cases across the United States and could require prediction market platforms to obtain state gambling licenses or limit operations in New York.

Kalshi and rival prediction market Polymarket are also facing increasing legal scrutiny in several states. Regulators have challenged their event contracts, while concerns over market manipulation and insider trading continue to draw attention. A federal judge in Minnesota recently suggested that platforms such as Kalshi and Polymarket may have expanded beyond the regulatory framework Congress envisioned when establishing the CFTC in 1974. Kentucky has also filed lawsuits alleging the companies are operating illegal sports betting markets under state law.

Although Kalshi could appeal Judge Torres’ decision and seek emergency relief, the ruling signals growing regulatory pressure on prediction markets despite continued support from the CFTC.