Kalshi Appeals Ruling Upholding New York Ban on Sports Prediction Contracts

Kalshi, a prediction-market platform regulated by the U.S. Commodity Futures Trading Commission, offers event contracts tied to outcomes including sporting events. Michigan authorities contend those products amount to sports betting and must comply with the state’s licensing and gambling rules. The dispute is significant because it tests whether federal derivatives oversight preempts state enforcement, an issue that could shape prediction markets nationwide as a potential U.S. Supreme Court battle approaches.

A Michigan court has ordered Kalshi to continue blocking sports prediction-market trading for users in the state, extending a temporary restriction imposed in June. The injunction keeps the sports contracts unavailable while litigation proceeds or until a higher court intervenes. If Kalshi violates the order, it could face fines of as much as $500,000 for each day of noncompliance, sharply raising the stakes in its fight with Michigan regulators.

Kalshi operates a designated contract market regulated by the Commodity Futures Trading Commission and argues that its event contracts are federally supervised derivatives rather than wagers subject to state licensing. The dispute tests where financial regulation ends and gambling oversight begins, with major implications for prediction-market operators, state consumer-protection regimes and the CFTC’s claim to exclusive jurisdiction under the Commodity Exchange Act.

On Aug. 28, 2026, a unanimous three-judge panel of the U.S. Court of Appeals for the Ninth Circuit held that Kalshi had not shown the Commodity Exchange Act was likely to preempt Nevada gaming laws. The court affirmed the dissolution of an injunction covering sports-event contracts and sent questions involving election contracts back to the district court. No monetary damages were awarded. The decision conflicts with the Third Circuit’s approach, prompting the CFTC to signal a potential Supreme Court fight.

Kalshi has operated as a Commodity Futures Trading Commission-designated contract market since 2020. It argues that sports event contracts are federally regulated derivatives, while Connecticut treats them as unlicensed sports wagers governed by state gambling and consumer-protection laws. The dispute tests whether federal commodities oversight pre-empts state gaming regulation, with implications for prediction markets nationwide. Connecticut legalized sports wagering in 2021 under a licensed framework, and officials say Kalshi’s model bypasses those safeguards and puts consumers and young people at risk.

Connecticut sued Kalshi on Aug. 26, 2026, seeking an injunction to stop the platform from offering sports event contracts. The state Department of Consumer Protection had ordered Kalshi, Robinhood and Crypto.com to halt such products in December 2025. A federal judge denied Kalshi’s request for a preliminary injunction against state enforcement earlier in August, and the company appealed to the U.S. Court of Appeals for the Second Circuit. Kalshi Head of Litigation Jovy Dedaj called the state’s approach arbitrary and inconsistent, saying rival prediction markets remain allowed to operate there.

Kalshi lets users trade event contracts tied to sports, elections and other outcomes, arguing that its status as a designated contract market overseen by the U.S. Commodity Futures Trading Commission puts it under federal commodities law rather than state gambling regimes. The stakes extend across the fast-growing prediction-market industry: Kalshi recorded $33 billion in volume in June 2026, compared with a combined $13.95 billion for Polymarket and its U.S. platform.

King County Superior Court Judge John McHale on July 20, 2026, granted the Washington Attorney General’s Office a preliminary injunction, finding the state was likely to prove Kalshi violated the Washington Gambling Act and Consumer Protection Act. He also rejected Kalshi’s argument that the federal Commodity Exchange Act preempts state law. The court will review further submissions by Aug. 3, with the order set to take effect no earlier than Aug. 5 and temporarily bar sports-related event contracts in Washington.

Kalshi offers event contracts as a designated contract market regulated by the US Commodity Futures Trading Commission (CFTC). The central legal question is whether contracts allowing users to trade on outcomes are federally regulated derivatives or sports betting products subject to state oversight. The rulings will determine whether prediction markets can operate nationwide.

In early July 2026, Kalshi failed to secure a Nevada Supreme Court stay of an order blocking trading in the state, while a Michigan court issued a separate two-week temporary restraining order. The company also sued Ohio regulators and mounted a legal defense in Minnesota. North Carolina’s proposed budget would impose a 6% tax on related revenue, while Kalshi’s deadline to appeal in New Jersey was extended to August 4.

Kalshi is a prediction market regulated by the U.S. Commodity Futures Trading Commission that allows users to trade contracts on event outcomes. The company argues that its products are financial swaps, while Michigan considers its sports contracts to be unlicensed online gambling. The dispute centers on whether federal financial regulation can preempt state gambling laws and also raises questions about consumer protection and gambling tax revenue.

On June 29, 2026, Ingham County Circuit Court Judge Rosemarie Aquilina granted Michigan Attorney General Dana Nessel's request for a 14-day temporary restraining order barring Kalshi from offering or promoting sports contracts to people in the state. The platform must use third-party geolocation technology that complies with state rules to block users. Violations carry a fine of $120,000 per day, and the order was originally set to remain in effect through July 13.

Kalshi is a prediction-market platform regulated by the U.S. Commodity Futures Trading Commission (CFTC) that allows users to trade contracts based on sporting-event outcomes. Illinois has subjected such products to state sports-betting restrictions, sparking a dispute over whether federal derivatives oversight preempts state intervention. The outcome could also affect how prediction markets operate across states.

Kalshi recently sued Illinois officials to challenge a provision in the state's newly enacted budget bill that is scheduled to take effect on July 1. The company argues that restrictions on sporting-event contracts encroach on the CFTC's exclusive regulatory authority. It is seeking to block enforcement, saying the provision would immediately restrict its products and cause irreparable harm that monetary damages could not adequately remedy.

Kalshi is a designated contract market regulated by the US Commodity Futures Trading Commission, allowing users to trade event contracts tied to outcomes including sports results. Each contract settles at a maximum of $1. New Jersey's Division of Gaming Enforcement classified the activity as unlicensed sports betting, raising the question of whether federal derivatives regulation preempts state law.

On April 6, 2026, the US Court of Appeals for the Third Circuit voted 2–1 to uphold a preliminary injunction issued on April 28, 2025. The court found that sports event contracts are swaps under the Commodity Exchange Act and fall under the CFTC's exclusive jurisdiction. On June 26, the state separately requested an extension until September 4 to file a petition for a writ of certiorari with the Supreme Court.

Kalshi is a designated contract market regulated by the US Commodity Futures Trading Commission, or CFTC, and argues that event contracts tied to sports, elections and other outcomes are swaps governed by the federal Commodity Exchange Act. The Nevada Gaming Control Board contends that Kalshi is offering gambling without a license. The dispute centers on whether the CFTC’s exclusive jurisdiction preempts state gaming laws and could determine whether prediction markets can operate under uniform nationwide rules.

On March 19, 2026, the US Court of Appeals for the Ninth Circuit denied Kalshi’s request for an emergency administrative stay, leaving intact a March 2 order returning the case to state court. On March 20, Nevada First Judicial District Court Judge Jason Woodbury issued a 14-day temporary restraining order. He extended it on April 3, finding that an event contract was functionally similar to gambling by comparing it with an identical $100 wager on a baseball game.

Kalshi, an event-contract exchange founded in 2018 and launched in 2021, lets users wager on real-world events through “yes/no” contracts. It expanded into politics in 2024 and sports in 2025. The dispute centers on whether the federal Commodity Exchange Act preempts state gambling laws, with implications for the regulatory boundaries of prediction markets across the United States.

Washington Attorney General Nicholas Brown sued Kalshi in King County Superior Court on March 27, 2026, alleging that it offered wagering on elections, sports and judicial events without a license from the Washington State Gambling Commission. Contracts cost $0.01–$0.99 each and pay the winner $1. The state is seeking a permanent injunction, restitution for all losses incurred by residents, disgorgement of proceeds and penalties for each violation. The complaint did not specify a total amount.