US judge allows New York to restrict sports gambling on prediction markets
A federal judge ruled against Kalshi's attempt to override New York state gambling laws, finding no clear congressional intent to preempt state authority over prediction markets.
Court Ruling
U.S. District Judge Jessica Torres rejected Kalshi's lawsuit seeking to exempt its sports-event prediction contracts from New York's gambling regulations. The judge determined that Congress did not have a clear and manifest purpose to preempt state gambling laws when enacting the Commodity Exchange Act (CEA).
Legal Reasoning
Torres noted that while the CEA grants the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over swaps on designated contract markets, this authority does not supersede state laws. She emphasized that gambling regulation is a traditional state police power, and Congress left room for supplementary state legislation. Kalshi failed to show it would be impossible to comply with both New York law and the CEA.
Conflicting Appeals Court Rulings
The decision adds to a broader legal battle over state regulation of prediction markets. In April, the 3rd Circuit ruled that New Jersey cannot regulate sports bets on such markets, while the 6th Circuit refused to block Ohio's gambling laws. These contradictory rulings increase the likelihood that the U.S. Supreme Court will eventually have to decide where federal jurisdiction ends and state authority begins.
