Kalshi’s New York Loss
A federal court’s rejection of Kalshi’s preemption arguments in New York became the leading prediction market story of the week. Several states immediately used the decision in their own legal battles.
Beyond the courtroom, North Carolina adopted a tax on prediction markets, Polymarket pursued more sophisticated trading products, and new industry data suggested the sector has grown into a half-trillion-dollar annualized market.
Here’s everything you need to know about this week’s biggest developments in prediction markets.
Litigation and Regulatory Battles Expand Kalshi’s New York Defeat Reshapes the National Litigation Landscape
The biggest development of the week came from New York.
Judge Analisa Torres denied Kalshi’s motion for a preliminary injunction against state officials. The court found that all four factors necessary for a preliminary injunction weighed against Kalshi, including the likelihood of success on the merits, irreparable harm, the balance of equities, and the public interest.
Judge Torres emphasized that gambling regulation has historically been a matter of state police powers and therefore carries a “presumption against preemption.”
The decision had an immediate effect on other prediction market litigation. Gaming attorney Daniel Wallach noted on X that state attorneys general in Connecticut, Illinois, Minnesota, Utah, and Wisconsin cited Judge Torres’ opinion as supplemental authority in their pending cases.
The New York Attorney General’s Office also submitted the ruling in the separate federal lawsuit brought by the Commodity Futures Trading Commission (CFTC) against New York.
New Mexico Seeks to Return Kalshi Dispute to State Court
Attorney General Raúl Torrez filed a motion to remand New Mexico’s lawsuit against Kalshi back to a state court. Torrez argues that the dispute should be decided in state court rather than federal court. The filing prompted the federal court to delay scheduling deadlines and vacate an upcoming scheduling conference pending resolution of the remand motion.
Motions to remand have so far succeeded in Nevada, Michigan, Massachusetts and Washington. Last week, a Michigan judge issued a temporary restraining order against Kalshi, requiring the prediction exchange to halt offering contracts on sporting events in the state.
US Soldier Seeks Dismissal in Polymarket Insider Trading Case
A U.S. soldier accused of insider trading on Polymarket moved to dismiss the CFTC’s lawsuit against him this week. Defendant Gannon Ken Van Dyke argues that the trades at issue were not swaps, therefore falling outside the CFTC’s authority. Van Dyke also challenges the CFTC’s use of Rule 180.1, the agency’s broad anti-fraud provision.
Polymarket Sued Over Disputed Strategy Bitcoin Market Resolution
Polymarket was also hit with a new lawsuit over its resolution of a market concerning whether Strategy sold Bitcoin before a specified deadline.
Plaintiffs allege that the platform improperly changed its interpretation of the market’s rules after the relevant events had already occurred. That prevented holders of winning positions from being paid.
The lawsuit raises broader questions about prediction market governance and how platforms resolve disputed outcomes.
New Class Action Accuses Kalshi of Unlawful Data Sharing
A new class action against Kalshi in the Southern District of New York alleges the company unlawfully shared users’ personal information and trading activity with third-party advertising and analytics companies.
According to the complaint, Kalshi’s website allegedly transmitted user information and market activity through tracking technologies operated by companies including Google, TikTok, LinkedIn and AppLovin.
The plaintiffs claim that users’ market activity, browsing behavior and trading information were disclosed without proper consent.
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