Kalshi, Coinbase lose interim injunction bids
The U.S. Court of Appeals for the Second Circuit has denied requests by Kalshi and Coinbase for injunctions preventing state enforcement while their appeals proceed. The November 3 order covers Kalshi’s disputes with New York and Connecticut officials and Coinbase Financial Markets’ separate Connecticut case.
Judges John M. Walker Jr., Dennis Jacobs and Joseph F. Bianco considered the three applications together. The short order states that the appellants had not made the required showing for an injunction pending appeal. It does not decide the underlying appeals or provide a final determination of the products’ legal status.
The New York appeal concerns Kalshi’s case against officials of the state Gaming Commission. The Connecticut matters involve Kalshi’s dispute with consumer-protection officials and Coinbase’s case against Attorney General William Tong and other officials. Coinbase’s application in this order concerns Connecticut, rather than both states.
Federal and state jurisdiction remain disputed
The companies argue that sports event contracts fall under the federal Commodity Exchange Act and the oversight of the Commodity Futures Trading Commission. State authorities contend that the products are subject to their gambling laws. The request for temporary protection sought to restrict enforcement while the appellate courts examine those arguments.
Denial of the motions leaves the companies without the particular appellate injunctions they requested. The order itself does not direct customers to close positions, require liquidation or issue a nationwide prohibition. Those potential consequences must be distinguished from separate proceedings and any additional orders.
The disputes form part of a wider set of cases concerning the relationship between derivatives regulation and state gambling authority. That separate decision does not determine the New York or Connecticut appeals, whose merits remain unresolved by the November 3 order.
