A New York judge has ended the state-court proceeding against prediction-market operator Kalshi after the company shifted the fight to federal court, leaving Attorney General Letitia James’ request for immediate restrictions undecided.

Supreme Court Justice Melissa A. Crane ruled Monday (August 3) that New York’s request for an injunction or restraining order was moot. She denied it without prejudice, allowing the state to try again if a federal judge sends the case back.

Crane also told the New York County Supreme Court clerk to mark the proceeding as disposed.

The procedural turn came after Kalshi filed for removal on July 31 while New York’s request for emergency relief was still awaiting a decision.

“Respondent removed this matter to federal court on 7/31/26 (Doc 59 [notice of removal]),” Crane wrote in the order.

“Accordingly, it is ORDERED that Motion 01 is denied as moot, without prejudice to a new motion should the federal court remand this special proceeding.”

New York Kalshi case moved to federal court

Behind that procedural ruling is a clash over whether Kalshi’s event contracts amount to gambling under New York law. James and Gov. Kathy Hochul announced the lawsuit July 31, accusing Kalshi of offering contracts tied to sports, elections and other events without a state gaming license.

The state wants Kalshi blocked from operating in New York and is seeking restitution, alleged profits, customer accounting and civil penalties.

“Kalshi has chosen to ignore New York’s gaming laws, which exist to protect consumers,...