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Kalshi and Coinbase lose bid to pause state sports-contract enforcement

A three-judge panel said the companies failed to make the required showing for an injunction pending appeal, without ruling on whether federal derivatives law displaces state gambling law. The denial covers three appeals considered together, and the states are now one remand order away from returning the enforcement suits to state courts.

Kalshi and Coinbase have been denied injunctions by the Second Circuit, leaving New York and Connecticut free to enforce their gambling laws against sports event contracts, according to Legal Sports Report.

A procedural setback, not a ruling on federal authority

A three-judge panel found that the companies had not made the showing required to obtain an injunction pending appeal. The denial applies to three appeals considered together, according to Legal Sports Report.

The panel did not decide whether federal derivatives law displaces state gambling law. That distinction limits the decision’s reach: the companies failed to secure interim protection, but the underlying question of federal versus state authority remains unresolved.

State-court proceedings move closer

The states are now one remand order away from having the enforcement suits returned to state courts, according to Legal Sports Report. The injunction denial therefore removes a requested barrier to enforcement without itself completing that return.

For prediction-market readers, the immediate development concerns enforcement exposure for sports event contracts in New York and Connecticut—not a definitive answer about which regulatory framework governs them.

What it means for prediction markets

  • Enforcement can proceed: The denied injunctions leave New York and Connecticut free to apply their gambling laws against sports event contracts.
  • The central legal dispute remains open: The panel did not rule on whether federal derivatives law supersedes state gambling law.
  • Remand is the next procedural milestone: A further order is needed to return the enforcement suits to state courts.
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    Legal Sports Report
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