SDNY judge denies Kalshi preliminary injunction in New York preemption fight
A federal judge in Manhattan denied Kalshi's request for a preliminary injunction against New York state authorities. The ruling lets the state's lawsuit against the prediction market platform proceed without federal intervention. The denial marks another loss for Kalshi's argument that CFTC registration preempts state gambling law. The platform is already appealing a separate New York trial loss to the Second Circuit.
Kalshi now lacks a federal shield in New York, Wisconsin, Washington, and Michigan. Each state court that rejects preemption forces the platform to choose between geofencing costly markets or defending parallel gambling suits. Traders holding contracts they bought under CFTC registration face sudden voiding risk where state judges rule.
The Second Circuit appeal is Kalshi's only path to a single national standard, but that court may not act before additional states file. The platform's legal budget multiplies with each new front. For now, state gambling law is the practical floor operators must build around, not the CFTC order they registered under. Polymarket holds identical registration and faces identical exposure.
The SDNY decision adds New York to the string of state courts that have rejected CFTC preemption, joining recent rulings from Wisconsin and Washington.