In the summer of 2026, three federally regulated prediction market operators filed federal lawsuits against New York — all asserting the same core legal theory. Kalshi, Coinbase, and Novig each contend that their sports and financial event contracts are derivatives regulated exclusively by the U.S. Commodity Futures Trading Commission (CFTC), and that New York cannot apply its gambling or sports wagering statutes to shut them down.
This is not about three companies separately losing patience with one state. It is about a federal-versus-state legal question that no court has definitively answered — and New York becoming the venue where that question gets forced.
All three cases were filed in the U.S. District Court for the Southern District of New York (S.D.N.Y.), each seeking a preliminary injunction to block New York from applying its gambling statutes to the companies' federally registered event-contract markets. Filing dates and final status for Kalshi and Coinbase are being confirmed at primary sources — verify current details at PACER or the platforms' official sites.
| Platform | Legal Entity | Filed | Status / Outcome |
|---|---|---|---|
| Kalshi | KalshiEX LLC | — | PI denied — Judge Analisa Torres, July 7, 2026 |
| Coinbase | Coinbase Financial Markets Inc. | — | See platform's official site for current status |
| Novig | Ludlow Exchange LLC | August 5, 2026 | Pending — no hearing date set as of filing |
All three cases in S.D.N.Y. Novig filing date and details: Ludlow Exchange LLC v. James et al. (S.D.N.Y., Aug. 5, 2026). Kalshi and Coinbase filing dates: confirm at PACER or official platform sites.
New York pursued Kalshi and Coinbase under Executive Law §63(12), which allows the AG to sue businesses engaged in "persistent fraud or illegality." Novig, anticipating the same treatment, filed preemptively — before New York had taken any formal action against it.
The Commodity Exchange Act (CEA) gives the CFTC exclusive authority to regulate futures and event contracts traded on federally designated exchanges. Under the U.S. Constitution's Supremacy Clause, when federal law explicitly occupies a regulatory field, conflicting state laws are "preempted" — meaning they cannot apply.
All three companies argue that their sports and financial event contracts are derivatives regulated exclusively by the CFTC under CEA §2(a)(1)(A). If the federal framework controls, New York cannot apply its gambling statutes to shut them down.
From Novig's complaint (S.D.N.Y., Aug. 5, 2026):
"New York has moved aggressively against federally regulated event-contract trading within its borders, suing both KalshiEX LLC and Coinbase Financial Markets, Inc. under Executive Law §63(12) for offering the type of contracts at issue here. Novig, having just secured its status as a Designated Contract Market registered by the CFTC, brings this action to prevent Defendants from doing the same to Novig."
Despite the shared legal theory, federal courts have reached conflicting conclusions. The preemption question remains unresolved.
✓ For Preemption
Third Circuit (Apr. 6, 2026, No. 25-1922) — ruled 2-1 in favor of Kalshi and Coinbase; state gambling laws preempted. The only appellate ruling to date.
✗ Against Preemption
S.D.N.Y. (Judge Torres, July 7, 2026) — denied Kalshi's preliminary injunction. E.D. Wisconsin (July 29, 2026) — also rejected the preemption argument.
No Supreme Court review has been granted as of August 2026. The outcome of the New York cases may determine whether the issue reaches SCOTUS.
For a deeper look at federal-versus-state authority, see How Prediction Markets Can Be Federally Legal But State-Restricted.
As of August 2026, New York has pursued Kalshi and Coinbase but no final court order has barred any platform from the state. The cases are actively litigating. Novig filed preemptively and its contracts remain live as of its filing date. Check each platform's official app or site for current access — this can change quickly when court orders issue.
For per-platform NY access status, see New York Prediction Markets.
A New York ruling will not automatically resolve other states' cases, but it carries significant persuasive weight. If S.D.N.Y. upholds preemption, it creates pressure on other district courts. A rejection strengthens states with pending enforcement actions. See State Regulations for your state's specific status.
The offshore Polymarket site is outside CFTC jurisdiction and not party to these federal preemption lawsuits. Polymarket US (QCX LLC, CFTC-designated 2025) has not filed a New York preemption action. Confirm current access at Polymarket's official site.
A judge blocks New York from enforcing its gambling statutes against one or more platforms while litigation continues. Platforms operate in New York during the case. This would be a significant short-term win for the industry and could create momentum in other states.
The court follows the Torres precedent and denies the injunction. Platforms may geofence New York users or appeal to the Second Circuit. A Second Circuit ruling creates binding precedent in New York, Connecticut, and Vermont, sharpening the split with the Third Circuit.
If the Second Circuit and Third Circuit reach opposite conclusions, the Supreme Court becomes the likely final arbiter. A SCOTUS ruling would settle the preemption question nationally — either confirming federal authority everywhere or leaving states as the primary regulators.
Legality during active litigation is complex. All three platforms are federally registered with the CFTC as Designated Contract Markets, which is their basis for operating nationally. None has received a final court order barring it from New York as of August 2026. Platforms may choose to restrict access proactively. Confirm current availability at each platform's official site before depositing funds.
No definitive national ruling exists. The Third Circuit ruled 2-1 in favor of preemption in April 2026. The Southern District of New York (July 2026) and the Eastern District of Wisconsin (July 2026) both ruled against preemption. The circuit split means different federal appeals courts may reach different conclusions until the Supreme Court weighs in.
If courts consistently reject the preemption argument, CFTC-registered prediction markets would face the same state-by-state licensing requirements as traditional gambling operators. Platforms would likely need separate licenses in each state or choose to restrict access to states where they cannot obtain a license. Congress could also respond by amending the Commodity Exchange Act to clarify federal jurisdiction.
The offshore Polymarket site is not a U.S. CFTC-registered entity and is not party to these federal preemption lawsuits. Polymarket US (QCX LLC), the CFTC-designated entity launched in 2025, has not filed a similar New York preemption action. For current Polymarket US access by state, check Polymarket's official site.
Cases in the Southern District of New York are assigned by docket rotation. Judge Torres was also assigned Kalshi's earlier New York action and denied its preliminary injunction request in July 2026. Novig's filing landed in her court as well, creating a potentially disadvantageous draw given the prior ruling.
New York Prediction Markets
Current per-platform access status in New York
Novig (Ludlow Exchange) Guide
Full guide to the newest CFTC-registered exchange
What the NY AG Kalshi Lawsuit Means
User-focused breakdown of the Kalshi-specific case
Federally Legal But State-Restricted
Why state laws can still apply to federal exchanges
State Regulations Hub
Regulatory status for every U.S. state
Kalshi Legal Risks 2026
Comprehensive tracker of Kalshi litigation nationwide
Primary sources: Novig (Ludlow Exchange LLC) CFTC DCM designation, June 16, 2026 — cftc.gov filing #59390. Ludlow Exchange LLC v. James et al. complaint, S.D.N.Y., Aug. 5, 2026. Third Circuit ruling: KalshiEX LLC v. Williams, No. 25-1922 (3d Cir. Apr. 6, 2026). S.D.N.Y. PI denial: KalshiEX LLC v. Williams (Torres J., July 7, 2026).
