Ripple Lawsuit-Linked Judge Torres Hands Kalshi a Big Loss in NY Prediction Markets Case

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Ripple Lawsuit-Linked Judge Torres Hands Kalshi a Big Loss in NY Prediction Markets Case

Ripple Lawsuit Judge Torres Denies Kalshi’s Preliminary Injunction Against NY

SDNY Judge Analisa Torres, who presided over the high-profile SEC v. Ripple lawsuit involving XRP, has rejected Kalshi’s request for a preliminary injunction.

Judge Torres found that New York state gambling laws apply to Kalshi’s sports-related event contracts and are not preempted by the Commodity Exchange Act (CEA). The decision clears the way for the lawsuit to proceed.

In KalshiEX LLC v. Williams, Kalshi argued that its sports-related event contracts qualify as CFTC-regulated swaps traded on a designated contract market (DCM). It requested the court to approve a temporary restraining order and preliminary injunction to block New York regulators from enforcing gambling laws against the prediction market.

New York Attorney General Letitia James disagrees that federal oversight preempts state gambling laws. Her office is now expected to file a civil enforcement action against Kalshi in state court seeking restitution, disgorgement, civil penalties, and injunctive relief.

According to sports betting and gaming law attorney Daniel Wallach, this is a major loss for Kalshi as it could potentially impact other ongoing cases. Prediction markets could be forced to obtain state licenses or restrict operations in New York.

BREAKING: Kalshi denied preliminary injunction in crucial Southern District of New York case by Judge Analisa Torres. Major, major loss for Kalshi in the financial capital of the US, with likely knock-on effects in other cases (especially Connecticut and other SDNY lawsuits). pic.twitter.com/pLCobVo21S

— Daniel Wallach (@WALLACHLEGAL) July 8, 2026

Challenges Faced by Prediction Markets in Other States

Kalshi and Polymarket prediction markets are currently facing many state-level lawsuits and regulatory actions over their event contracts, as well as market manipulation and insider trading concerns.

A Minnesota federal judge recently agreed with the state’s argument that prediction market platforms such as Kalshi and Polymarket have “far exceeded what Congress initially intended” when creating the CFTC framework in 1974.

Recently, Kentucky joined other U.S. states in suing prediction market operators Kalshi and Polymarket, alleging that they were offering illegal sports betting in the state. Kentucky Attorney General Russell Coleman claimed they are subject to gambling laws rather than financial laws.

Notably, Kalshi may appeal Ripple lawsuit-linked Judge Torres’ ruling to seek an immediate injunction pending that appeal. However, the momentum has clearly shifted against prediction markets, despite the CFTC supporting Kalshi and Polymarket.

Here are the best crypto prediction markets to try in 2026 to predict the outcome of events across crypto markets, sports, politics, economics, pop culture, and more.

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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more… to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.