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New York gets preliminary win in dispute with CFTC, Kalshi with restraining order denial

Legal Writer

Publish Date: Aug 04, 2026

Fact checked by: Matt Moreno

Key Points

A federal court denied the CFTC’s request for an emergency temporary restraining order on Monday
Order could be reviewed on Friday but unlikely to be reversed
CFTC appeal likely forthcoming, but New York has momentum in crucial case

The federal government’s case against the state of New York regarding New York’s attempts to enforce its gambling laws against prediction market operators is not going well for the plaintiffs at the moment, although the litigation is in the early stages. A federal judge denied the government’s request for a temporary restraining order against New York Attorney General Letitia James on Monday.

James filed a landmark lawsuit against Kalshi on Friday, alleging that Kalshi was operating an illegal gambling ring. Although the federal government still has options for affecting a restraining order against James’ Kalshi suit, its hope for an expedient restraint has faded.

A view of the judge's bench inside a federal courtroom at the Daniel Patrick Moynihan US Federal Courthouse in Manhattan, New York City, on Friday, June 6, 2025. This federal courthouse is home to the US District Court for the Southern District of New York (SDNY).

(Photo by Jefferson Siegel / POOL / AFP) (Photo by JEFFERSON SIEGEL/POOL/AFP via Getty Images)

Federal court denies CFTC request for temporary restraining order

The United States Commodity Futures Trading Commission (CFTC) and Department of Justice (DOJ) filed their lawsuit against New York in April, but James’ lawsuit against Kalshi escalated that action. Before James actually filed her complaint with a state court, the CFTC and DOJ filed a petition for an emergency temporary restraining order (TRO) to block her from moving forward with that case with the U.S. District Court for the Southern District of New York (SDNY).

Judge Jed S. Rakoff responded to that petition on Monday. He wrote in his order that the government “had not shown a high likelihood of success on the merits or a likelihood of irreparable harm.”

Rakoff is not the presiding judge in USA v. New York. That judge, Victor Marrero, is out until Friday, Aug. 7. Marrero’s return to the bench is the government’s first hope for a TRO in this case.

Options for delaying New York’s case against Kalshi at this point

Marrero may review and alter or overturn Rakoff’s order upon his return to the bench. Such decisions are rare, though, because of professional courtesy and communication between judges.

Unless Marrero reverses course at the SDNY, the CFTC/DOJ’s next step is to appeal the SDNY’s decision on the TRO to the U.S. Second Circuit Court of Appeals. At least until Marrero returns, though, James can move forward with her case against Kalshi.

At this point, that attention focuses on remanding the case back to state court after Kalshi removed it to SDNY. Rakoff’s decision on the TRO is a good sign for that effort.

SDNY TRO denial signals success for remand efforts

Although SDNY may not act upon James’ petition to remand her case against Kalshi back to state court as quickly as it responded to the CFTC’s TRO request, Rakoff’s denial of the TRO suggests a bench favorable to James’ petition. Kalshi removed the case to federal court on the premise that the litigation dealt with significant questions of U.S. law.

State courts are often viewed as offering a “home field” advantage to state attorneys general given their relationships with judges and the deference that judges often give to attorneys general in their application of case law. Given the stakes of James’ lawsuit against Kalshi, the venue is the first important development in the litigation that seems to be going New York’s way.

New York is seeking to block Kalshi from offering most of its event contracts in the state and no fewer than $36 million in damages. In the early rounds of that fight, it’s advantage New York.

For more updates regarding this ongoing battle plus other news, make sure to visit our Ballislife Play page.

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