U.S. District Judge Analisa Torres rejected Kalshi’s argument that the federal Commodity Exchange Act supersedes state gambling laws, according to the report.
Kalshi appealed the decision the same day it was handed down, per the report.
Kalshi did not immediately reply to PYMNTS’ request for comment.
New York Gov. Kathy Hochul and Attorney General Letitia James said Wednesday in a statement: “New York’s gambling laws are designed to protect consumers. Kalshi tried to ignore them. Yesterday, they lost in court.”
“We will continue to hold all gambling platforms accountable to the law—and that includes prediction markets,” Hochul and James added.
The court battle was sparked when New York’s gambling commission ordered Kalshi to stop offering unlicensed sports event contracts. The company responded by suing the state in October, according to the Reuters report.
In April, the Commodity Futures Trading Commission sued New York in response to what the regulator said was the state’s effort to apply its gambling laws to CFTC-regulated contract markets.
“New York is the latest state to ignore federal law and decades of precedent by seeking to enforce state gambling laws against CFTC-registered exchanges,” CFTC Chairman Michael S. Selig said at the time in a press release. “As I’ve said before, the CFTC will not allow overzealous state governments to undermine the agency’s longstanding authority over these markets.”
PYMNTS reported in December that prediction markets have become a flash point between federal and state regulators. The CFTC argues that real-money prediction markets fall under its jurisdiction, while a growing number of states have sought to shut down the markets they view as unlicensed or illegal gambling operations.
It was reported Saturday (July 4) that prediction markets have seen a surge in trading volume thanks to the World Cup. Kalshi’s platform saw its notional volume increase 70% month over month in June to reach more than $31 billion. The platform has seen volumes of more than $1 billion each day since the tournament began.
