Kalshi appealed to the Second Circuit after a New York federal judge denied its request to block state gambling officials from enforcing local laws against its sports event contracts.
Kalshi is appealing a New York federal judge's rejection of its bid to block state gambling officials from enforcing local laws against the prediction market platform's sports-related event contracts.
In a notice filed on Tuesday in the US District Court for the Southern District of New York (SDNY), Kalshi said it would take the case to the US Court of Appeals for the Second Circuit. The appeal followed a same-day opinion and order denying the platform operator's motion for a preliminary injunction against officials at the New York State Gaming Commission.
The appeal escalates a growing legal fight over whether sports prediction markets are federally regulated derivatives or state-regulated gambling products. This question has already split courts across the United States.
Judge Analisa Torres earlier Tuesday rejected that argument at the preliminary injunction stage, finding that New York gambling laws, as applied to Kalshi’s sports-event contracts, were not preempted by the US Commodity Exchange Act. The court said Kalshi had not made a “clear or substantial showing” that it was likely to succeed on the merits.
The order also noted that other jurisdictions have had split opinions on similar requests from Kalshi. Some have granted injunctions against state enforcement, while others have denied the company’s motions.
“Major loss for Kalshi in the nation’s financial capital, with likely knock-on effects in other cases (esp. Connecticut and other SDNY lawsuits),” wrote lawyer Daniel Wallach, whose Florida law firm is devoted principally to sports wagering and gaming law in the US.
Kalshi's appeal comes as prediction market platforms face mounting pressure from state regulators over their sports event contracts.
In May, the Commodity Futures Trading Commission (CFTC) backed Kalshi in an Ohio federal appeals court fight after the platform challenged efforts to restrict its prediction market offerings. The CFTC's filing came after it had sued five states, including Wisconsin, New York, Arizona, Connecticut and Illinois, to assert jurisdiction over prediction markets.
On June 25, Kalshi sued Illinois officials over a state law it said “expressly bans sports event contracts” unless prediction market platforms obtain local licenses. The platform argued that the law usurped the CFTC's authority over federally regulated derivatives markets.
Related: Kalshi June trading volume tops $9B as World Cup fuels prediction markets
State regulators have also cracked down on other platforms. In April, Wisconsin sued Robinhood, Coinbase, Polymarket, Crypto.com, as well as Kalshi, over sports event contracts. The state alleged that the platforms facilitated illegal sports betting.
Source
This article is syndicated for educational reading. For the latest updates, visit the original publisher.
Read on cointelegraph.com
