Kalshi & Coinbase lose bid to block New York & Connecticut

New York’s lawsuit seeks forfeiture of all Kalshi’s state gains plus restitution to users.

The hit

A three-judge Second Circuit panel denied Kalshi & Coinbase an injunction against New York & Connecticut, according to Sports Betting Dime. The ruling clears both states to enforce their gambling laws against the prediction market firms’ sports event contracts. The panel heard arguments from Kalshi, Coinbase & the CFTC before issuing its order the same day.

Why it matters

The order strips Kalshi & Coinbase of federal cover in two key states while their appeals continue. Judge Analisa Torres ruled New York gambling laws as applied to Kalshi’s sports event contracts are not preempted by the CEA. Judge Vernon D. Oliver reached a similar finding on Kalshi’s Connecticut injunction motion, ruling the contracts do not meet the CEA’s definition of a swap. New York’s pending suit alone seeks at least $36 billion, a sum that exceeds Kalshi’s entire $22 billion valuation.

The record

New York district ruling	Judge Analisa Torres denied injunction, July
Connecticut district ruling	Judge Vernon D. Oliver denied injunction, August
New York lawsuit filed	1 minute after midnight, Friday, July 31 (Gov. Hochul & AG James)
New York penalty sought	$100,000 per unauthorised sports betting offer
Kalshi valuation	$22bn

What happens next

Watch for the Second Circuit’s written reasoning & the progress of New York’s & Connecticut’s underlying lawsuits, the latter still pending in Connecticut Superior Court.

Sources: Second Circuit Denies Kalshi, Coinbase Injunction Motion in NY, CT

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