A Manhattan judge has refused to shield Kalshi from New York’s gambling laws, three months after a federal appeals court held the opposite in New Jersey — and Alito has given New Jersey until August 4, 2026 to reach the Supreme Court.
US District Judge Analisa Torres denied Kalshi’s preliminary injunction on July 7, 2026, letting New York enforce against its sports-related event contracts. It sits in direct tension with the Third Circuit’s April ruling that the Commodity Exchange Act (CEA) preempts New Jersey’s sports-wagering laws — the clearest sign yet that who regulates sports event contracts is heading to the Supreme Court.
Key Facts:
• Judge Analisa Torres denied Kalshi’s injunction, July 7, 2026 — SDNY
• The Third Circuit held in April 2026 that the CEA preempts New Jersey’s sports-wagering laws — Third Circuit
• Alito gave New Jersey until August 4, 2026 to petition the Supreme Court — Gaming America
• The Commodity Futures Trading Commission (CFTC) has sued nine states over prediction-market rules — CFTC
What Judge Torres decided
Kalshi argues its sports event contracts are swaps under exclusive CFTC jurisdiction. New York calls them unlicensed sports wagering.
Torres sided with the state — not by declaring the contracts gambling, but by finding Kalshi had not shown a likelihood of success on preemption (Crowdfund Insider). She leaned on the presumption against preemption in areas traditionally policed by states — and gambling is about as traditional as those get. That reasoning matters: “you have not proved preemption” leaves the door open. Kalshi has appealed.
The split is now undeniable
In April the Third Circuit became the first federal appeals court to hold the CEA preempts state gambling law for sports event contracts. Tennessee agreed in February; Ohio went the other way in March, finding the contracts are not swaps at all. Nor has the federal regulator been neutral: the CFTC has sued nine states — among them Arizona, Illinois, Wisconsin and Kentucky — to stop them regulating prediction markets.
“[The CFTC] will continue to pursue litigation in any state that infringes on its federal authority,” said Michael Selig, chairman of the CFTC. An agency suing states while states prosecute its registrants is not a stable equilibrium — precisely the profile of a case the Supreme Court takes.
Why August 4 matters
Alito granted New Jersey a shorter extension than it sought, to file by August 4, 2026. Its solicitor general wants to see how the Sixth Circuit rules on July 30 first, since that would sharpen the split.
This is not an abstraction for sportsbooks. Prediction markets have been absorbing volume that would otherwise reach licensed books — see how Polymarket and Kalshi are catching the handle US sportsbooks lose. If the Supreme Court affirms the Third Circuit, federally registered exchanges could offer sports contracts nationwide without state licences. If not, Kalshi’s sports business fragments state by state.
What This Means for Bettors
Market impact: the ruling does not remove Kalshi from New York today — enforcement is permitted, not automatic — but it raises the odds of state-by-state fragmentation, where a contract trades in New Jersey and not across the Hudson.
One concrete read: the July 30 Sixth Circuit decision is the near-term catalyst, not August 4. A ruling against Kalshi hardens the split and makes Supreme Court review likelier. Watch spreads on sports event contracts widen after a state-friendly ruling — thin books price uncertainty into the quote first.
Where the legal markets are: New York’s sportsbooks are regulated by the New York State Gaming Commission (NYSGC); New Jersey’s by the Division of Gaming Enforcement (NJDGE). Both stay open regardless — the fight is whether a federally registered exchange can offer competing sports products without a state licence. Newer markets are unaffected, as our Alberta launch coverage shows.
Correct as of July 12, 2026. Informational only — not financial or betting advice. 18+ / 21+ depending on jurisdiction. See Responsible Gambling notice below.
FAQ
Q: Did Kalshi lose in New York?
A: It lost a preliminary injunction. On July 7, 2026, Judge Analisa Torres found Kalshi had not shown a likelihood of success on preemption. It has appealed.
Q: Why does this contradict the New Jersey ruling?
A: The Third Circuit held in April 2026 that the Commodity Exchange Act preempts New Jersey’s sports-wagering laws. New York’s district court declined to follow — hence the split.
Q: What happens on August 4?
A: New Jersey’s deadline, set by Alito, to petition the Supreme Court over the Third Circuit ruling. A Sixth Circuit decision on July 30 will likely shape it.
Gambling carries financial risk and can be addictive. If you or someone you know needs help, visit GamCare (UK), call 1-800-GAMBLER (US), or see our Responsible Gambling page. 18+ / 21+ depending on jurisdiction.
