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

BlockBeats News, 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 the state of New York from pursuing enforcement actions against the prediction platform Kalshi. The judge ruled that the CFTC failed to demonstrate the likelihood of success of its case or the existence of irreparable harm. However, the rejection was made without prejudice, allowing the CFTC to refile a related 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 in this case is whether federal commodity law takes precedence over state law — state authorities argue that event contracts are a form of prediction subject to state regulation, while the CFTC and Kalshi argue that they are derivatives under the exclusive jurisdiction of the CFTC.