Judge Torres Deals Blow to Kalshi in New York Sports Betting Case

Judge Analisa Torres of the Southern District of New York ruled that Kalshi failed to demonstrate that the Commodity Exchange Act (CEA) necessarily shields its sports event contracts from state regulation. By denying the injunction, the court confirmed that New York’s case will advance to the motion-to-dismiss stage. The court emphasized that the regulation of gambling and lotteries remains a matter of predominantly state concern, dismissing the notion that federal designation grants an absolute exemption from state licensing requirements.

This ruling creates significant headwinds for Kalshi, which relies on sports-related contracts for approximately 65% of its total trading volume. The decision directly contradicts the exchange’s stance that federal oversight creates a uniform national standard that precludes state-by-state interference. While this order does not resolve the litigation, it signals that federal authority under the CEA has clear limits when intersecting with traditional state powers. As the industry faces mounting pressure from gaming groups pushing for the CLARITY Act, the conflict between federal market regulation and state-level gambling oversight continues to escalate, with regulators suggesting the matter could eventually reach the Supreme Court.