The world's most popular room-renting service is now illegal in the largest city in the United States, CNET reports. This could be a setback.

The sublease startup, which is largely enjoyed but occasionally disastrous, is now out of New York—pending appeal—for violating the city's "hotel law."(Read the full court decision below) You see, you can't run a hotel out of your apartment (even a very shabby one in a cramped studio apartment) for the same reason you can't pretend your car is a taxi and let people pay you for rides, sans license. Obviously the Silicon Valley disruption set doesn't care much for either of these notions, and Airbnb hasn't paid that law any attention. Now it'll have to—and it should, given how useful the service is (so long as it doesn't result in your apartment being destroyed without recourse) in a city where it can be a colossal nightmare to find an affordable bed.

The company—recently valued at $2.5 billion—is of course, not going to just lie down and take this. Without access to New York, that valuation might lose a few zeros.

Airbnb provided us with the following statement:

This decision runs contrary to the stated intention and the plain text of New York law, so obviously we are disappointed. But more importantly, this decision makes it even more critical that New York law be clarified to make sure regular New Yorkers can occasionally rent out their own homes. There is universal agreement that occasional hosts like Nigel Warren were not the target of the 2010 law, but that agreement provides little comfort to the handful of people, like Nigel, who find themselves targeted by overzealous enforcement officials. It is time to fix this law and protect hosts who occasionally rent out their own homes. 87 percent of Airbnb hosts in New York list just a home they live in — they are average New Yorkers trying to make ends meet, not illegal hotels that should be subject to the 2010 law.

Decision and Order for NOV 35006622J