US Judge Denies Kalshi Injunction: Federal Law Does Not Preempt Gambling Laws

The legal situation for so-called prediction markets, which trade events like sports outcomes, remains complicated in the US. A recent ruling from New York provides further clarity in favor of state gambling regulation. A federal judge has rejected Kalshi's attempt to circumvent state gambling laws through federal commodity regulations.

Judge Analisa Torres emphasized in her decision that gambling regulation has historically fallen under the jurisdiction of individual states. This principle of federalism, also known as the presumption against preemption, was a central point of her argument.

Numbers and facts

On July 8, 2026, US Federal Judge Analisa Torres in New York announced her decision to deny Kalshi's motion for a preliminary injunction. Kalshi had argued that the Commodity Exchange Act (CEA) should preempt New York state gambling laws concerning sports event contracts. Judge Torres found that all four factors necessary for a preliminary injunction – likelihood of success on the merits, irreparable harm, balance of equities, and public interest – weighed against Kalshi.

The judge made it clear that Congress, in passing the Dodd-Frank Act, intended to prevent markets resembling sports betting.

"Congress sought to prohibit the exact types of event contracts that Kalshi seeks to offer." - Analisa Torres, U.S. District Judge

We saw a similar situation when Judge Adam B. Abelson in Maryland denied Kalshi's motion for a preliminary injunction on August 1, 2025. This was the first victory for state regulators on this issue after Kalshi had previously been successful in Nevada and New Jersey. The Nevada decision was then reversed in November 2025, illustrating the complexity of the legal situation.

Background

Since July 2021, Kalshi has offered trading in contracts on various future events. In October 2024, the company expanded its offerings to include contracts on political elections, including the 2024 US presidential race. Just in time for the 2025 Super Bowl, Kalshi also introduced contracts on sports events, tradable in all 50 states. This expansion met resistance from state gambling regulatory authorities, who viewed Kalshi's offerings as illegal sports betting operated without the required licenses.

Kalshi responded by filing lawsuits in several states, including Nevada, New Jersey, and Maryland, seeking a court declaration that state gambling laws were preempted by the Commodity Exchange Act (CEA). Initially, Kalshi achieved success, particularly in Nevada and New Jersey, where judges issued preliminary injunctions in the company's favor. However, this winning streak ended when Judge Abelson in Maryland denied Kalshi's motion. The original decision in Nevada was also later reversed.

These legal disputes point to a widening conflict between states and the federal government over whether prediction markets are financial products or gambling. US federalism is a crucial element in this debate. It is expected that these questions will ultimately need to be resolved by the US Supreme Court.

Why it matters for German players

For German players operating under the State Treaty on Gambling (GlüStV 2021), such international legal disputes are an important indicator of the general attitude of many jurisdictions towards protecting against unregulated gambling. The GlüStV 2021 has created clear rules in Germany to protect players and ensure the legality of online gambling.

These include a monthly deposit limit of 1,000 euros, a stake limit of 1 euro per game round for slot games, and the central player self-exclusion system LUGAS, which allows for exclusion across all licensed online providers. Operators like Kalshi, who seek to override applicable state law, would not receive a license from the Joint Gambling Authority of the Federal States (GGL) in Germany. The German regulatory system is designed to avoid grey areas and create a safe gaming environment that protects players from the risks of unregulated offers. German players should therefore only play with providers listed on the GGL's whitelist.

What it means for GGL-licensed casinos

The decision in New York underscores the importance of state regulation in gambling. For GGL-licensed casinos in Germany, this confirms the current course. The GGL has set high standards to ensure player and youth protection. The US ruling shows that attempts to circumvent these standards by appealing to higher-level laws often fail.

GGL casinos must adhere to strict rules, ranging from player registration to deposit and stake limits and advertising. Individual cases like Kalshi's illustrate that strict state controls are necessary to prevent abuse and ensure a fair and safe gaming environment. This consequence of regulation not only protects players but also the integrity of the regulated gambling market by keeping out disreputable providers.