Kalshi Denied Injunction Twice in New York as Minnesota Blocks Prediction Market Ban: Full Legal Tracker
Judge Analisa Torres rejects Kalshi's emergency relief for the second time in three weeks, while Judge Menendez in Minnesota rules the opposite way on the same statute, setting up a likely Supreme Court showdown
Updated July 2026
- July 28, 2026: Judge Analisa Torres (SDNY) denies Kalshi's second emergency injunction, allowing New York Gaming Commission enforcement to proceed
- July 27, 2026: Judge Katherine Menendez (D. Minn.) grants Kalshi and Polymarket an injunction blocking Minnesota's prediction market ban
- July 9, 2026: Torres denied Kalshi's first injunction; Kalshi refiled July 15
- April 2026: Third Circuit (New Jersey) ruled CFTC jurisdiction preempts state gambling authority, Kalshi's first major appellate win
- ~90% of Kalshi's trading volume involves sports-linked event contracts
- $1 billion+ in Kalshi trades processed on the 2026 Super Bowl alone
- Case is now before the Second Circuit on appeal; Supreme Court review considered increasingly likely given the growing circuit split
What Did the New York Court Rule on July 28?
Judge Torres denied Kalshi's motion for a second emergency preliminary injunction, which would have prevented the New York State Gaming Commission from taking enforcement action against the company's sports event contracts. Torres concluded that Kalshi had not met the legal threshold for emergency relief and stated the company had "essentially repackaged its failed arguments" from its first motion, which she had already denied on July 9. The judge also noted that "Defendants have laid out significant harms associated with halting their efforts to enforce state gaming regulations," giving explicit weight to New York's interest in maintaining its licensing regime over sports-linked financial products.
Why Was This Kalshi's Second Injunction Attempt in Three Weeks?
Kalshi filed its first emergency injunction in early July 2026, seeking to block the New York Gaming Commission from acting against it while its underlying lawsuit was pending. Judge Torres denied that motion on July 9. Kalshi then refiled a second motion on July 15, arguing fresh grounds for irreparable harm, including the claim that it was being forced to choose between criminal liability under state law and violating its federal obligations as a CFTC-regulated exchange. Torres rejected that framing on July 28, finding no material change in circumstances that would justify revisiting her earlier ruling.
What Is Kalshi's Federal Preemption Argument?
Kalshi's core legal position is that the Commodity Futures Trading Commission holds exclusive federal jurisdiction over event contracts traded on its exchange under the Commodity Exchange Act (CEA), and that state gambling laws cannot lawfully be applied to federally regulated commodity contracts. The company, which handles an estimated 90 percent of its trading volume in sports-related event contracts and processed more than $1 billion in trades on the 2026 Super Bowl alone, argues that applying state gaming licensing requirements to its products would fragment the national market and undermine the CFTC's regulatory framework. The CFTC itself has filed its own challenges to state enforcement actions, lending institutional weight to Kalshi's preemption theory.
How Did Judge Torres Respond to the Preemption Claim?
Torres anchored her ruling in Section 2 of the Commodity Exchange Act, which expressly states that federal authority under the CEA "shall not supersede or limit the jurisdiction conferred on other regulatory authorities under the laws of the United States or of any state." She concluded that Congress had not intended to strip states of their traditional police powers over gambling when it enacted or amended the CEA, and that New York's assertion of jurisdiction over unlicensed sports wagering products fell within those reserved powers. The judge's reading treats the CEA savings clause as preserving a parallel lane for state gambling law, even where a platform holds a federal commodity exchange licence.
What Happened in Minnesota on July 27?
Hours before the New York ruling, U.S. District Judge Katherine Menendez of the District of Minnesota granted a preliminary injunction blocking Minnesota's newly enacted law that would have criminalized the operation of prediction market platforms within the state. Menendez found that the Minnesota statute "likely runs afoul of the Commodity Exchange Act" and ruled that the plaintiffs had demonstrated they were "likely to succeed on the merits" of their preemption claim. The plaintiffs in that case were Kalshi, Polymarket, and the CFTC itself. The Minnesota law had been scheduled to take effect imminently, making the last-minute injunction a significant operational reprieve for both platforms in that state.
How Do the New York and Minnesota Rulings Compare?
| Factor | New York (SDNY) | Minnesota (D. Minn.) |
|---|---|---|
| Judge | Analisa Torres | Katherine Menendez |
| Outcome for Kalshi | Injunction denied (twice) | Injunction granted |
| View on CEA preemption | CEA does not supersede state gambling authority | State law likely runs afoul of CEA |
| Plaintiffs | Kalshi alone | Kalshi, Polymarket, and CFTC |
| State action challenged | Gaming Commission enforcement against sports contracts | Statute criminalising prediction market operations |
| Likelihood of success finding | No | Yes |
The divergence is not merely procedural. Two federal judges are reading the same statute and reaching opposite conclusions about whether it displaces state gambling authority. That is precisely the kind of legal question appellate courts exist to resolve.
What Is the New Jersey Precedent?
In April 2026, the U.S. Court of Appeals for the Third Circuit ruled that New Jersey could not regulate Kalshi's prediction market offerings, finding that CFTC jurisdiction likely preempts state gaming authority in that circuit. That ruling was the first appellate-level win for the federal preemption argument and was widely described as a significant victory for Kalshi and the broader prediction markets sector. However, the Third Circuit's ruling does not bind the Second Circuit (which covers New York) or the Eighth Circuit (which covers Minnesota), and Judge Torres explicitly declined to follow its reasoning. The result is a growing patchwork of conflicting outcomes across federal courts.
What Does the Circuit Split Mean?
When federal courts in different circuits reach contradictory conclusions on the same statutory question, the Supreme Court typically treats the split as a strong reason to grant certiorari and settle the law nationally. Legal analysts tracking the prediction markets litigation have noted that the Third Circuit's ruling in New Jersey, the SDNY's contrary approach in New York, and the ongoing Eighth Circuit question from Minnesota together create exactly the kind of split that makes a Supreme Court petition viable. Several commentators predicted as early as April 2026 that the matter could reach the Supreme Court by 2027. Kalshi is currently appealing the New York district court ruling to the Second Circuit, and that appeal's outcome will be pivotal in determining whether the Supreme Court steps in.
What Are the Commercial Stakes for Kalshi?
The financial exposure is substantial. Approximately 90 percent of Kalshi's trading volume involves sports-related event contracts, the precise product category that New York is targeting. If the New York Gaming Commission proceeds with enforcement, Kalshi would face the choice of geo-blocking New York users, applying for a state gaming licence it has argued it does not legally need, or continuing operations and risking civil or criminal penalties. The company argued the latter amounted to irreparable harm, a claim Judge Torres rejected. The broader industry implications are also significant: prediction markets surged in the Q2 2026 earnings season as an emerging asset class, and the legal outcome will shape how other platforms manage state-by-state enforcement risk going forward.
Is the CFTC Supporting Kalshi?
Yes. The CFTC joined Kalshi and Polymarket as a co-plaintiff in the Minnesota case, arguing that state laws criminalising federally regulated prediction market activity are preempted by the Commodity Exchange Act. This is an unusual posture for a federal regulator, effectively suing a state to assert its own exclusive jurisdiction. Judge Menendez in Minnesota treated the CFTC's participation as a factor supporting the preemption argument. Judge Torres in New York reached a different conclusion, suggesting that the CFTC's interest in exclusive jurisdiction does not override the CEA's explicit savings clause for state regulatory authority.
What Happens Next?
Kalshi has appealed the earlier Torres ruling to the U.S. Court of Appeals for the Second Circuit. The July 28 denial will almost certainly be folded into or followed by further Second Circuit filings. The appellate court will be asked to address directly whether CEA Section 2's savings clause preserves state gambling authority or whether CFTC jurisdiction is exclusive for federally designated contract markets. A Second Circuit ruling against Kalshi, set alongside the Third Circuit's ruling in its favour, would cement a direct circuit split that the Supreme Court would be under significant pressure to resolve. The ongoing congressional debate around federal oversight of sports betting, including questions about whether prediction markets belong within a unified national framework, adds a political dimension to a battle that is primarily being fought through the courts.
"Defendants have laid out significant harms associated with halting their efforts to enforce state gaming regulations." Judge Analisa Torres, U.S. District Court, Southern District of New York, July 28, 2026
Frequently Asked Questions
What did the New York judge rule on July 28, 2026?
U.S. District Judge Analisa Torres denied Kalshi's second emergency injunction request, allowing the New York State Gaming Commission to continue enforcement proceedings against the platform's sports event prediction contracts.
Why did Minnesota reach a different conclusion on the same day?
Judge Katherine Menendez in Minnesota found that the state's prediction market ban likely runs afoul of the Commodity Exchange Act and granted an injunction. Torres in New York read CEA Section 2's savings clause differently, concluding it preserves state gambling authority alongside federal regulation.
What is Kalshi?
Kalshi is a CFTC-regulated prediction market exchange that allows users to trade on the outcome of real-world events, including sports results. Roughly 90 percent of its trading volume involves sports-linked contracts, and the platform processed more than $1 billion in Super Bowl trades in 2026.
Is this case heading to the Supreme Court?
Legal analysts consider a Supreme Court review increasingly likely. Kalshi has appealed to the Second Circuit, and a ruling there against the Third Circuit's position in the New Jersey case would create a formal circuit split the Supreme Court would likely resolve, potentially by 2027.
What can New York do to Kalshi without an injunction in place?
The New York State Gaming Commission can pursue civil enforcement actions, issue cease-and-desist orders, and potentially refer matters for criminal prosecution under state gambling statutes that require a gaming licence to offer sports wagering products.
Did the CFTC take a side in this dispute?
Yes. The CFTC joined Kalshi and Polymarket as co-plaintiffs in the Minnesota litigation, arguing that state laws criminalising federally regulated prediction market activity are preempted by the Commodity Exchange Act.
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