Second Circuit Denies Kalshi’s Requests for Injunctions in New York and Connecticut

The U.S. Court of Appeals for the Second Circuit denied Kalshi Markets Inc.’s requests for injunctions pending appeals in New York and Connecticut on Tuesday, 3 November 2026. The panel also denied a parallel injunctive motion from Coinbase in Connecticut, leaving state authorities free to press enforcement actions while the companies pursue appeals.

What the Second Circuit decided

A three-judge Second Circuit panel issued a short order on 3 November that consolidated several motions and concluded the appellants had not shown entitlement to an injunction pending appeal. The order states: > "Upon due consideration, it is hereby ordered that the motions are denied because appellants have failed to make the required showing that an injunction pending appeal is warranted." The order did not set out the panel’s detailed legal reasoning.

The consolidated decision covered three separate matters:

• Kalshi’s litigation with the New York State Gaming Commission (NYSGC)

• Kalshi’s litigation with the Connecticut Department of Consumer Protection (DCP)

• Coinbase’s appeal against Connecticut Attorney General William Tong and other state officials

By denying the motions, the appeals court left the way open for New York and Connecticut officials to pursue state-court enforcement of what they characterise as unlawful sports event contracts.

How the cases reached the Second Circuit

Federal judges in both states earlier declined to grant preliminary injunctions to Kalshi. In New York, U.S. District Judge Analisa Torres ruled in July that state gambling laws are not preempted by the Commodity Exchange Act (CEA). In Connecticut, U.S. District Judge Vernon Oliver wrote in August that Kalshi’s sports event contracts do not qualify as swaps under the CEA.

Kalshi appealed both federal decisions to the Second Circuit and combined them into a single motion for injunctions pending appeal. Coinbase, which offers sports contracts via Kalshi, separately appealed Judge Oliver’s August ruling and sought preliminary relief in the same consolidated petition.

After those federal losses, both states filed separate enforcement suits in state court. New York Governor Kathy Hochul and New York Attorney General Letitia James sued Kalshi on 31 July, seeking approximately $36bn in penalties, including disgorgement, restitution to customers, and fines tied to revenue from the products in the Empire State. Connecticut Attorney General William Tong, Governor Ned Lamont, and the Connecticut Department of Consumer Protection filed a state-court lawsuit against Kalshi about four weeks after New York’s filing.

Kalshi sought to move each state-court case back into federal court, but both states filed motions to remand in September. With the Second Circuit’s denial of injunctions on 3 November, the pending state actions remain able to proceed while appeals continue.

Circuit rulings stacking up against prediction markets

The Second Circuit’s decision adds to a series of federal appeals court rulings this year that have allowed state enforcement actions against prediction market operators to proceed. The Ninth Circuit denied Kalshi’s appeal against Nevada in late August in a unanimous 3-0 decision and later refused a rehearing en banc. The Ninth Circuit also ruled in mid-September for two California tribes asserting violations of the Indian Gaming Regulatory Act (IGRA). The Sixth Circuit issued a unanimous 3-0 ruling in September permitting Ohio and Tennessee to pursue enforcement actions, after which Ohio expanded actions against other operators including Coinbase.

The only major federal appeals court decision favouring prediction markets so far came from the Third Circuit, which issued a 2-1 ruling in April for Kalshi against New Jersey. That Third Circuit judgment is now the basis for New Jersey’s petition to the Supreme Court. The Supreme Court recently granted Kalshi a second extension to file its response to New Jersey’s petition, moving the deadline to 7 December 2026.

Immediate practical effect

The Second Circuit’s order does not itself impose penalties; it removes temporary federal relief that would have paused state enforcement. New York and Connecticut officials, citing the federal district court rulings, have already pursued state-court remedies: New York seeks roughly $36bn and Connecticut has active claims filed by AG William Tong, Gov. Ned Lamont and the Connecticut Department of Consumer Protection. Kalshi has appeals pending in multiple circuits and must now continue litigating without the requested injunctions in the Second Circuit.

Kalshi’s counsel and Coinbase did not obtain a stay from the Second Circuit on 3 November, and both companies remain positioned to press their appeals of the underlying merits decisions in due course.