Manhattan federal court weighs New York's prediction market crackdown
Judge Lorna G. Schofield heard arguments on the CFTC's bid to halt a New York prediction market crackdown but did not immediately rule. The judge questioned both the CFTC and New York over conflicting appellate rulings in the case. Attorneys for the Commodity Futures Trading Commission and a prediction market operator asked the Manhattan federal court to block New York State's action. The hearing took place in Manhattan federal court.
The New York hearing extends Kalshi's losing streak on federal preemption into a third front, after Nevada and Connecticut already stripped its shield. Each new state venue costs Kalshi fresh legal spend while the old cases keep running. Judge Schofield's questions about conflicting appellate rulings signal she may follow the Ninth and other circuits rather than carve a New York exception.
Polymarket faces identical exposure because the same preemption logic underpins its sports offerings. Traders hold positions whose legality shifts with each state ruling, not with federal regulation. A New York loss would fragment another chunk of national liquidity. The Supreme Court petition from New Jersey remains Kalshi's only path to a single federal answer, but cert grants are rare and state filings outpace the docket.