Second Circuit Denies Kalshi and Coinbase Injunction Bid Against New York, Connecticut

A three-judge panel of the U.S. Court of Appeals for the Second Circuit denied motions by Kalshi and Coinbase on November 3, 2026 to block New York and Connecticut from enforcing their gambling laws against sports event contracts while the companies' appeals move forward. The order itself was brief, saying only that the companies "failed to make the showing required" for an injunction pending appeal - but it leaves Kalshi and Coinbase exposed to state court proceedings in both states in the meantime, with New York reportedly seeking damages in the billions of dollars.

At oral argument, judges on the panel - John M. Walker Jr., Joseph F. Bianco, and Dennis Jacobs - pushed back hard on the companies' central legal theory: that sports event contracts are federally regulated "swaps" under the Commodity Exchange Act, which would preempt state gambling law entirely. Judge Walker questioned how sports betting broadly could qualify as a swap, since he understood the term to require an underlying event with financial, economic, or commercial consequences, and Judge Bianco said applying the swap definition to sports felt like forcing a square peg into a round hole, while also warning that the companies' downstream-effects logic could reach traditional regulated sportsbooks like Caesars just as easily. Connecticut's lawyer separately argued that losing access to sports contracts isn't irreparable harm for Kalshi, pointing to the company's recently closed $1 billion funding round at a $40 billion valuation - prompting Walker to ask whether that valuation even depends on sports contracts in the first place.

This is the third appellate panel to lean against the swap-preemption argument this year, following the Sixth Circuit's September ruling for Ohio and the Ninth Circuit's ruling for Nevada - a pattern that increasingly looks like circuit-level consensus rather than a one-off loss. The CFTC, which argued in support of its own regulatory authority during the hearing, told the court state jurisdiction over these contracts could undercut the agency's own insider-trading and manipulation enforcement; Kalshi is separately trying to move both the New York and Connecticut cases into federal court, where similar attempts by the company have failed elsewhere.

Kalshi and Coinbase aren't sweepstakes casinos and we don't have an affiliate relationship with either, but this is the same legal fight we've been tracking all year across Ohio, Utah, Illinois, and now New York and Connecticut: a federal commodities-market label running up against state gambling law, with the circuit courts so far consistently siding with the states.