Second Circuit denies Kalshi and Coinbase emergency injunctions

The US Court of Appeals for the Second Circuit refused on November 3 to temporarily block New York and Connecticut from enforcing state gambling laws against Kalshi and Coinbase, leaving both companies exposed to state enforcement action while their appeals proceed.

The three-judge panel resolved three separate motions in a two-page order, saying only that the companies had not demonstrated sufficient grounds for temporary relief. It did not require either platform to halt trading or close existing positions.

Kalshi is contesting enforcement actions brought by the New York State Gaming Commission and the Connecticut Department of Consumer Protection. Coinbase faces separate action from Connecticut Attorney General William Tong over its prediction market offerings, which the company has said generate more than $200 million in annualized revenue.

Both companies argue their sports event contracts qualify as swaps under the Commodity Exchange Act, placing them under exclusive CFTC jurisdiction and beyond the reach of state gambling regulators. New York and Connecticut read the same contracts as unlicensed sports bets subject to state law.

The Second Circuit's refusal to issue a stay runs alongside the Ninth Circuit's unanimous denial of Kalshi's rehearing petition in the Nevada case, where a separate panel held that sports event contracts do not qualify as swaps under the CEA's definition. Kalshi now has 90 days to petition the Supreme Court in that proceeding.