Kalshi keeps losing in court as judges refuse to block state gambling laws

Kalshi's courtroom tab keeps climbing. A three-judge panel on the Second Circuit refused Tuesday to put state gambling enforcement on hold in New York and Connecticut, upholding lower-court rulings that went against the prediction market. The judges folded both states' cases into one, then said no.

The panel's reasoning was blunt: a plaintiff asking for an injunction mid-appeal has to show it's likely to win on the merits, and Kalshi didn't. The same panel also turned down Coinbase's bid to overturn its loss against Connecticut, which raised the identical legal question.

It's the second appellate smackdown in recent months. In September, the Sixth Circuit ruled unanimously that Ohio and Tennessee can enforce their gambling laws against Kalshi, dealing the company one of its heaviest blows yet.

Kalshi isn't fighting alone, though. The CFTC says it has sole authority over platforms like Kalshi and Polymarket, and it has sued Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island, Utah and Wisconsin to make that stick.

The company's bright spot came in April, when the Third Circuit ruled New Jersey can't regulate sports bets placed on prediction markets. Those judges leaned on the federal definition of swaps, finding that Kalshi's sports contracts qualify as swaps traded on a CFTC-licensed exchange, giving the agency exclusive jurisdiction.

Other courts split the other way, deciding at least some wagers on the platform aren't swaps and that state and federal regulators can both have a say. New Jersey has asked the Supreme Court to undo its Third Circuit loss, and 39 other states plus the District of Columbia filed a brief backing that petition.