A federal judge in New York has denied an emergency request from the Commodity Futures Trading Commission (CFTC) that sought to block the state from continuing its enforcement case against the prediction market operator Kalshi.

In a ruling issued by Judge Jed S. Rakoff, the court denied the temporary restraining order "without prejudice." The judge found that the CFTC had not adequately demonstrated a high probability of succeeding on the legal merits of its case, nor did it show a likelihood of suffering irreparable harm if New York's action was not halted.

While this decision permits New York’s lawsuit against Kalshi to move forward, it also leaves the door open for the federal agency. According to the order, the CFTC is permitted to renew its motion before a different judge, Victor Marrero, on Friday, August 7.

This legal confrontation follows a lawsuit filed last Friday by New York Attorney General Letitia James against Kalshi. The suit alleges that the company is running an illegal and unlicensed gambling enterprise through its offering of contracts based on the outcomes of sports, elections, and various other events. The state's action builds on a prior order from the New York State Gaming Commission, which had issued a cease-and-desist directive to Kalshi in October 2025.

The ruling represents the latest event in an ongoing jurisdictional battle. At the center of the dispute is whether federal commodities law supersedes state-level gambling enforcement for event contracts that are traded on exchanges regulated by the CFTC. State authorities maintain that these contracts function as wagers and are therefore subject to state gambling statutes. Conversely, both the CFTC and Kalshi assert that the contracts are derivatives that fall under the exclusive jurisdiction of the CFTC.