Kalshi is set to appeal a decision from a federal judge in New York who dismissed its attempt to prevent state gambling authorities from enforcing laws against the prediction market platform’s sports-related event contracts.

In a notice submitted on Tuesday to the US District Court for the Southern District of New York (SDNY), Kalshi announced its plans to take the case to the US Court of Appeals for the Second Circuit. This appeal follows an opinion issued on the same day that denied the platform operator’s request for a preliminary injunction against officials from the New York State Gaming Commission.

The appeal is a significant step in the ongoing legal debate over whether sports prediction markets should be classified as federally regulated derivatives or as gambling products subject to state regulation. This issue has divided courts across the country. Earlier on Tuesday, Judge Analisa Torres dismissed the argument at the preliminary injunction phase, concluding that New York’s gambling laws, when applied to Kalshi’s sports-event contracts, are not overridden by the US Commodity Exchange Act.

The court pointed out that Kalshi had not provided a “clear or substantial showing” of likely success on the merits of its case. The ruling also highlighted that courts in other jurisdictions have varied opinions on similar requests from Kalshi, with some granting injunctions against state enforcement and others rejecting the company’s motions.

Daniel Wallach, a lawyer whose firm specializes in sports wagering and gaming law, remarked, “This is a major setback for Kalshi in the nation’s financial capital, with potential implications for ongoing cases, particularly in Connecticut and other lawsuits within the SDNY.”