# Second Circuit Denies Kalshi and Coinbase Interim Relief Against States Federal appeals court allows New York and Connecticut to pursue illegal gambling lawsuits. - **Source:** [ReadWrite](https://brifing.si/source/7a996b61-bc09-4e57-8483-78f2ad9dd914) - **Published:** 2026-11-09 - **Topic:** [politics](https://brifing.si/c/politics) - **Original article:** - **On Brifing:** https://brifing.si/s/6a079782-eae0-4473-a55e-fa2b96337a6c ## Appeals Court Denies Injunction The Second Circuit Court of Appeals has denied requests from Kalshi and Coinbase for interim relief against New York and Connecticut. This ruling allows both states to continue their ongoing litigation regarding sports event contracts. The court determined the companies failed to meet the necessary legal threshold for an injunction pending appeal. ## State Gambling Law Enforcement New York and Connecticut are actively pursuing state-court lawsuits to force prediction market sports contracts offline. Officials argue these platforms operate as unlicensed gambling operations. Gaming attorney Daniel Wallach noted this decision marks a significant victory for the states, as they move closer to seeking preliminary injunctions within their own jurisdictions. ## Escalating Legal Conflict The legal battle involves high stakes, with New York reportedly seeking billions of dollars in damages. Connecticut’s Department of Consumer Protection initiated action in December 2025, ordering sites to stop unlicensed wagering. These state-level efforts aim to curb the expansion of prediction markets that local authorities classify as illegal sports betting. ## Federal Regulator's Stance The Commodity Futures Trading Commission (CFTC) maintains that federal law grants it exclusive authority over event contracts. The agency has previously sued Arizona, Connecticut, Illinois, and New York to protect its jurisdiction. Despite this, the Second Circuit has consistently ruled against the CFTC and companies in nine separate emergency relief attempts. ## Deepening Circuit Split This ruling highlights a growing divide among federal courts regarding prediction market regulation. While the Second Circuit sides with state enforcement, the Third Circuit previously ruled that New Jersey cannot regulate these markets, viewing them as federally regulated swaps. This contradiction creates a clear circuit split that likely requires Supreme Court intervention. ## Supreme Court Implications Attention is now shifting toward Washington as the legal conflict intensifies. New Jersey has already petitioned the Supreme Court to review the Third Circuit’s April 2026 decision. Kalshi is currently preparing its response to this petition, which will determine the future of federal versus state authority over these controversial financial event contracts. ## Historical Context of Lawsuits New York Attorney General Letitia James sued KalshiEX in July 2026, alleging illegal gambling operations. Similarly, Coinbase and Gemini faced lawsuits in April 2026. These actions coincide with broader efforts by state governors and attorneys general to assert control over digital prediction platforms that operate across state lines without local gaming licenses. ## Future Regulatory Outlook The outcome of these cases will define the reach of CFTC jurisdiction and the viability of state-level sportsbook markets. With nine federal rulings in the Second Circuit now favoring state enforcement, the industry faces significant operational uncertainty. Market participants must monitor the Supreme Court’s upcoming decision on the existing circuit court split. ## Sources covering this story - https://readwrite.com/second-circuit-denies-kalshi-and-coinbase-interim-relief-against-new-york-and-connecticut/ — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._