Second Circuit denies Kalshi and Coinbase bids to block state enforcement on sports contracts
A Second Circuit panel on Tuesday denied separate requests by Kalshi and Coinbase for temporary injunctions against state officials in New York and Connecticut. The companies had sought to block state enforcement actions against their sports event contracts. The panel found the firms failed to show the requested relief was necessary. The ruling leaves both companies exposed to state regulatory pressure as their underlying cases proceed.
Kalshi and Coinbase join Polymarket, Robinhood, and others in learning that CFTC registration no longer blocks state enforcement. Ohio and Tennessee have already pierced the preemption shield. The Second Circuit refusal means both firms must now defend sports contracts on state merits without federal cover. Each loss becomes template law the next attorney general copies, and Utah has already filed felony charges against Kalshi's co-founders.
The CFTC's swap-rule proposal could strengthen federal preemption, but it sits in White House review while state courts move in weeks. Platforms must fund parallel legal spend on three fronts: federal rule comments, state court defense, and product redesign. Kalshi's strategy of fighting state by state is failing, and Coinbase's pairing with Kalshi in this bid suggests the industry is consolidating around a collective defense that has yet to win.
Kalshi's federal preemption argument has now failed in Ohio, Tennessee, New York and Connecticut, and Missouri and Louisiana suits multiply the pattern as Utah adds felony charges against its co-founders.