The American Gaming Association has asked a federal judge in New York to reject the Commodity Futures Trading Commission’s bid for a preliminary injunction, arguing that sports-event contracts are gambling products in substance and should remain subject to state licensing, consumer-protection and tax rules while the lawsuit continues.
The filing, dated Sept. 7, came in the Southern District of New York case over whether federally regulated sports-event contracts belong exclusively to the CFTC or may also be policed by states as gambling products. The judge, Lorna G. Schofield, allowed the AGA to submit its brief without first deciding whether the group may formally intervene, and the court had not ruled on the injunction motion when the filing was made.
The association had already cast sports-related prediction markets as a target for state enforcement. In the new memorandum, it said a contract on whether a team wins, covers a point spread or finishes above a scoring total is a sports bet in substance, even when it trades on a federally registered exchange.
The AGA also argued that the economics of the products point in the same direction. It cited Kalshi advertising, product comparisons and reporting on Kalshi’s sports volume to say the markets resemble sportsbook wagers more than conventional financial hedges, and it accused prediction exchanges of competing on uneven terms by offering similar sports outcomes without operating under the state-licensed sportsbook system.
That argument rests on the claim that state rules still matter. State-licensed sportsbooks pay taxes and follow New York requirements on licensing, age limits, responsible-gaming controls and market restrictions. The association said New York mobile sports betting generated about $1.32 billion in state tax revenue in 2025, mostly for education, although the court had not adopted that estimate.
The underlying case began on April 24, when the United States and the CFTC sued New York after the state gaming commission ordered Kalshi to stop offering sports-event contracts without a state licence. The CFTC said New York had sought to enforce state laws against CFTC-registered entities through cease-and-desist letters and civil enforcement suits, and the federal complaint argued that the Commodity Exchange Act gives the agency exclusive jurisdiction over swaps and futures traded on federally regulated exchanges.
The filing also leaned on recent appellate decisions. The AGA said the Ninth Circuit’s Aug. 28 ruling in KalshiEX LLC v. Assad supports New York’s authority to regulate sports contracts as gambling, while the Third Circuit gave Kalshi preliminary protection against New Jersey enforcement and the Ninth Circuit ruled against it in Nevada. A separate judge in the Southern District of New York denied Kalshi’s own injunction request in July.
The preliminary-injunction motion would only decide whether temporary relief is appropriate while the case proceeds, not finally resolve whether sports-event contracts are swaps or whether federal law pre-empts New York gambling law.
