Second Circuit judge denies Kalshi shield from New York enforcement
A Second Circuit judge denied Kalshi's request for temporary protection against potential enforcement by New York gambling authorities, the company said. New York gaming officials had urged the court on July 30, 2026 not to block state gambling laws from applying to the federally registered prediction market platform. The ruling leaves Kalshi exposed to state regulatory pressure while it continues to operate. New York Attorney General Letitia James may now bring a civil lawsuit against the company.
Kalshi now faces enforcement exposure in at least four states—Michigan, Washington, Wisconsin, and New York—despite its CFTC registration. Each state that rejects federal preemption forces the platform into market-by-market geofencing or costly parallel litigation. Traders holding contracts they understood as federally backed face sudden voiding risk where state courts act.
The Second Circuit was Kalshi's best shot at restoring a single federal shield, but this denial keeps that protection on hold. Polymarket holds identical CFTC registration and faces identical exposure. State gambling law is becoming the practical operating floor for prediction markets nationally.