New York Attorney General Letitia James has filed a letter in the state’s case against Novig and the Commodity Futures Trading Commission (CFTC) referencing a Second Circuit Court’s decision to deny motions for injunction from both Kalshi and Coinbase.
As a result of the Second Circuit Court’s decision, Wallach Legal Founder Daniel Wallach predicted “immediate aftershocks” for Novig and the CFTC, which have seemingly come to fruition after James’ recent filing.
James, along with the New York State Gaming Commission (NYSGC), appear motivated to use the Second Circuit Court’s decision as a means to advance efforts to enforce state gambling laws against prediction market operators.
On August 12, the CFTC exercised emergency authority over Kalshi following New York's efforts to restrict the operator from providing event contracts to residents. The CFTC ordered Kalshi to continue operating in accordance with the Commodity Exchange Act's Core Principles after the exchange notified the regulator of a market emergency.
In response, the NYSGC filed a lawsuit against Kalshi in New York County Supreme Court over the operator's refusal to comply with various subpoena requests.
The requests are for records related to Kalshi’s sports-event contracts, offerings to residents who are under 21, advertisements describing its products as wagers or bets and the operator’s ownership structure.
Given the latest ruling handed down in New York, it appears Novig and the CFTC will struggle in their efforts to obtain a preliminary injunction against James and the NYSGC.
Following the Second Circuit Court ruling as well, James moved a step closer to resuming state enforcement action against Kalshi, along with fellow operators currently involved in legal cases with New York regulators.
Cases involving Kalshi, Coinbase, Gemini Titan and Polymarket – all of which are currently awaiting rulings from the Southern District – could move back to state courts through a remand order resulting from the Second Circuit decision.
Brightstar Lottery signed a two-year contract extension with the New York State Gaming Commission on October 20 to continue providing lottery technology and services in the state
