Kalshi Loses Second Circuit Pause in New York and Connecticut

The US Second Circuit refused to pause New York and Connecticut enforcement against Kalshi and Coinbase while appeals continue, a procedural setback for prediction markets with implications for Asian regulators.

Authored By Kshitij Kumawat

Published On: November 6, 2026

The US Court of Appeals for the Second Circuit refused to pause enforcement against Kalshi’s sports-event contracts in New York and Connecticut while the appeals proceed, a November 3 ruling that resonates far beyond the two states for every regulator trying to draw a line between prediction markets and gambling, including Singapore’s Gambling Regulatory Authority.

What the court actually decided

The Second Circuit’s order denied Kalshi’s requests for injunctions pending appeal in both the New York and Connecticut cases, and separately denied Coinbase’s similar request in Connecticut. The order was procedural: it did not rule on whether Kalshi’s sports-event contracts are, in substance, unlicensed sports betting. Lower federal courts had already denied preliminary injunctions in New York in July and in Connecticut in August of this year.

The practical effect is that Kalshi is not forced to shut down, but New York and Connecticut regulators keep their authority to pursue enforcement while the appeals continue. One gaming attorney quoted by Gaming America said he expects both states to have enough legal footing to block Kalshi and similar platforms by early 2027.

The core dispute: swap or wager?

Kalshi and Coinbase argue that their contracts on the outcomes of sporting events are federally regulated “swaps” under the Commodity Exchange Act, which places them under the jurisdiction of the Commodity Futures Trading Commission, not state gaming regulators. New York and Connecticut argue the same contracts function as sports bets and therefore require state licensing like any other sportsbook.

The CFTC has sued New York and other states to defend the federal-jurisdiction position. The New York State Gaming Commission filed a separate petition in October seeking records on sports-event contracts, advertising, and whether users under 21 were accepting them. Those filings sharpen a question regulators in Europe and Asia have been watching: can a product be sold as a derivative in one jurisdiction and treated as gambling in another, on the same underlying event?

Why Singapore, Malaysia and Thailand readers should care

Kalshi does not take Singapore, Malaysia or Thai customers on its US-facing platform, so the direct consumer exposure is low. But the regulatory question is not local. Singapore’s Gambling Regulatory Authority has already said it will not allow crypto to function as casino chips, and it has moved against novel betting products that sit outside the licensed sportsbook perimeter. Malaysia’s enforcement framework similarly leans on the Common Gaming Houses Act, which was written long before event contracts existed. Thailand’s Department of Special Investigation is currently probing Shuffle.com, a Curaçao-registered crypto casino that also offers sports and event markets.

If Kalshi ultimately loses on the merits, the precedent will give Asian regulators a ready argument: when a contract’s economics look like a bet on an uncertain event with a payout tied to the outcome, labelling it a derivative does not change what it is.

If a US-style prediction market started accepting Singapore residents tomorrow, would the Gambling Regulatory Authority treat it as a swap or as unlicensed sports betting?

What watchers should track next

Two things. First, the Second Circuit has not yet decided the appeals on the merits; those rulings will set the real precedent. Second, more states are joining the fight. Arkansas has filed its own suit, and a bloc of state regulators has publicly aligned against Kalshi’s federal-preemption argument. The direction of travel is against prediction-market operators who want to treat state gambling law as inapplicable.

Readers tracking how Singapore’s own licensing perimeter is drawn can start with our online casino Singapore legal guide, which covers the current GRA framework.

Frequently Asked Questions

What did the Second Circuit actually rule?

The court denied Kalshi and Coinbase requests to pause state enforcement in New York and Connecticut while their appeals continue. The order did not decide whether Kalshi sports-event contracts are legal under state law.

Does the ruling shut Kalshi down in New York and Connecticut?

No. Kalshi is not forced to stop operating. The ruling preserves the status quo, which means state regulators can continue enforcement actions while Kalshi pursues its appeals.

Why does this matter for Southeast Asia?

Kalshi does not serve Singapore, Malaysia or Thailand directly, but the US precedent on whether event contracts are derivatives or gambling will shape how Asian regulators treat similar products if they appear in their markets.

Are prediction markets the same as sports betting?

Economically the two can look identical: a payout tied to the outcome of a defined event. Legally they are treated differently depending on jurisdiction, licensing, and whether the contract settles through a regulated exchange or a sportsbook.

What is the CFTC position?

The Commodity Futures Trading Commission backs the view that event contracts are federally regulated swaps and has sued New York and other states to defend that position. State regulators disagree and argue the contracts function as sports bets.

What happens next in the appeals?

The Second Circuit still needs to decide the New York and Connecticut appeals on the merits. Those rulings, not the recent procedural denial, will set the binding precedent. Separate cases are moving in the Ninth Circuit and in state courts.

Has Singapore Gambling Regulatory Authority addressed prediction markets?

The GRA has not issued a dedicated rule on prediction markets, but it has publicly rejected crypto as a casino payment medium and taken enforcement action against novel betting products that fall outside licensed operators.

Does Coinbase face the same restrictions?

Coinbase is a co-defendant in the Connecticut case for its own sports-event contracts. Its injunction request was also denied, so the same enforcement exposure applies there.

Could other US states follow?

Arkansas has filed its own suit against Kalshi, and a bloc of state regulators has publicly opposed the federal-preemption argument. More state-level actions are likely before any Supreme Court involvement.

What should readers watching from Malaysia or Thailand track?

Track whether the Second Circuit rules on the merits in Kalshi favour, and whether any licensed Asian operator starts offering event contracts as a derivative. Either move would force local regulators to take a position.