U.S. District Judge Analisa Torres denied KalshiEX’s attempt to secure an emergency injunction while its appeal is pending in the Second Circuit. The decision came on July 27 in the case KalshiEX LLC v. Williams, where Kalshi sought relief from New York state enforcement actions as it fights regulatory challenges over its sports-event contracts.
The court ruled that Kalshi failed to demonstrate a strong likelihood of success on appeal, irreparable harm, or that the balance of equities and public interest favored granting the injunction. Instead of deferring to the Commodity Futures Trading Commission’s (CFTC) proposed interpretation of federal law which argued that the Commodity Exchange Act preempts state gambling laws on registered exchanges Judge Torres independently interpreted the statute and maintained that federal law does not fully displace state gambling regulations in this context.
Kalshi’s earlier motion for a preliminary injunction was denied on July 7, with the court finding that New York’s gambling laws likely apply to Kalshi’s contracts and are not preempted by federal law. Kalshi appealed that ruling, but the latest order only blocks Kalshi from obtaining short-term relief and leaves the underlying lawsuit and appeal unresolved. The court also dismissed Kalshi’s argument that it faces an impossible choice between violating state law or risking its federal registration, describing those concerns as speculative and the financial costs insufficient to qualify as irreparable harm.
The CFTC’s June proposed rule, which would clarify federal preemption of state laws over event contracts on registered exchanges, remains under public review and has not been finalized. Judge Torres emphasized that courts must independently interpret statutes, referencing the Supreme Court’s Loper Bright decision, and stated her prior view that the Commodity Exchange Act does not automatically override all state gambling laws related to swap transactions.
Meanwhile, Kalshi’s emergency motion at the Second Circuit remains pending, with New York regulators opposing the request. This federal court decision adds another hurdle for Kalshi as it navigates complex regulatory scrutiny in New York amid evolving federal rulemaking.
