New York judge denies CFTC motion against Kalshi as state lawsuits multiply
A New York judge denied a CFTC motion to halt its enforcement action against Kalshi on August 4, letting the federal case proceed. Separately, New York state sued Kalshi in its own action. In Wisconsin, a federal court rejected the CFTC's bid to shield prediction markets from a state gambling lawsuit targeting Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase. New Mexico meanwhile asked a court to dismiss the CFTC's suit against the state, where it had sued Kalshi last month.
Kalshi now faces parallel federal and state litigation in New York alone, while Wisconsin's ruling lets that state enforce gambling laws against five CFTC-registered platforms. The CFTC cannot block state action through federal preemption motions; judges in both Wisconsin and New York have said so. For traders, contract validity depends on which state issued their trade.
Each new loss forces Kalshi to geofence another market or absorb voiding risk. The Second Circuit appeal is the only path to a national standard, but that court may not rule before more states file. Legal spend and operational complexity rise with every additional front; the federal registration Kalshi built its expansion on is increasingly just a federal label, not a shield.
New York becomes the fifth state to sue Kalshi directly, after Michigan, Washington, Wisconsin, and New Mexico, as the CFTC's federal preemption shield fails in court after court.