New York Judge Denies CFTC's Motion to Halt Enforcement Action Against Kalshi, Federal-State Jurisdiction Battle Continues

August 4th - Judge Jed S. Rakoff in the New York area today rejected the Commodity Futures Trading Commission's (CFTC) application for an emergency temporary restraining order aimed at preventing New York state from pursuing enforcement actions against the prediction platform Kalshi. The judge believed that the CFTC had not demonstrated the likelihood of success of its case, nor had it shown the existence of irreparable harm. However, the rejection was ruled "without prejudice," and the CFTC may refile the relevant motion by August 7th.

New York Attorney General Letitia James sued Kalshi last Friday, accusing it of operating an illegal unlicensed prediction business by offering contracts on events such as sports and elections. New York State had issued a cease and desist order to Kalshi as early as October 2025. The core dispute of this case is whether federal commodity law takes precedence over state law - state authorities argue that event contracts fall under state-regulated predictions, while the CFTC and Kalshi assert that they are derivatives under the exclusive jurisdiction of the CFTC.