Torres Drops the Gavel on Kalshi's Parlay: NY Sports Contracts Aren't Swaps 🪙

Federal Judge Analisa Torres, who presided over the SEC v. Ripple lawsuit, has ruled against prediction market platform Kalshi in a New York gambling case, denying the company's request for a preliminary injunction. The decision allows New York state to continue enforcing its gambling laws against Kalshi's sports-event contracts.

In the case KalshiEX LLC v. Williams, Kalshi argued that its sports-related event contracts qualify as CFTC-regulated swaps traded on a designated contract market (DCM). The company sought a temporary restraining order and preliminary injunction to block New York regulators from enforcing the state's gambling statutes.

Judge Torres found that New York state gambling laws apply to Kalshi's sports-related event contracts and are not preempted by the Commodity Exchange Act (CEA). The ruling clears the way for the lawsuit to proceed.

New York Attorney General Letitia James has opposed Kalshi's legal challenge. Her office has maintained that the sports-event contracts fall under state gambling regulations.

The case marks a significant setback for Kalshi, one of the leading federally regulated prediction market operators in the United States. The ruling leaves Kalshi's sports contracts exposed to state-level enforcement actions in New York while the underlying litigation advances.