Judges John M. Walker Jr., Dennis Jacobs and Joseph F. Bianco considered the three appeals in tandem. Coinbase’s motion sought to bar Connecticut from applying state laws to sports-related contracts on federally regulated exchanges. Kalshi’s New York motion similarly sought protection from gambling-law enforcement.
Sports Contracts and Broader New York Claims
Connecticut’s campaign targets sports-event contracts. The state announced a lawsuit against Kalshi in August, seeking an injunction to stop what it calls unlicensed sports wagering. In September, regulators announced cease-and-desist orders against additional platforms, including Coinbase, demanding that they stop offering sports-event contracts to Connecticut residents.
New York’s civil petitions against Coinbase and Kalshi reach beyond sports to election and entertainment or cultural contracts. Attorney General Letitia James seeks orders barring their alleged unlicensed gambling businesses, along with restitution, disgorgement and penalties. Those are the state’s allegations and requested remedies, not relief granted by the appellate order.
Coinbase’s current customer guidance says prediction markets are available to U.S. residents except those in Nevada and Michigan, leaving Connecticut and New York within its stated coverage. Coinbase also says Kalshi operates the underlying markets. That published eligibility policy is distinct from the legal protection the companies sought and failed to obtain.
A Different Result From Illinois
The denial contrasts with the partial Illinois victory previously reported by The Defiant. In her Oct. 2 opinion, U.S. District Judge Martha M. Pacold found that core contracts on who wins a title game likely qualify as swaps under the Commodity Exchange Act, and that Illinois licensing restrictions likely conflict with federal law.
Pacold granted preliminary-injunction requests in part while leaving fee questions for further briefing. The Second Circuit’s brief order supplies no comparable analysis resolving whether federal derivatives law displaces state gambling rules.
The appeals continue: Connecticut officials’ response brief in Coinbase’s case is due Nov. 20.
