CFTC orders Kalshi to continue operating prediction markets in New York despite state-level legal challenges.
Regulation & Gov ·
The Commodity Futures Trading Commission invoked emergency authority on Tuesday to require Kalshi to continue operating its prediction markets after the exchange reported a market emergency to the agency. The move came in response to New York Attorney General Letitia James filing suit on July 31 to halt Kalshi's contracts nationwide and seek more than $36 billion in damages, characterizing the platform as an unlicensed gambling operation.
CFTC Chairman Michael Selig framed the dispute as a conflict between federal and state jurisdiction, arguing that interstate financial venues matching orders across state lines should not be subject to a patchwork of state gaming regulations. The agency has now sued nine states—including Illinois, Arizona, Connecticut, Wisconsin, and Minnesota—over their bans on event contract trading. Kalshi has faced steeper legal obstacles, with judges in the Southern District of New York denying it preliminary relief in July.
Whether the CFTC's emergency directive will withstand judicial scrutiny remains unclear, particularly given prior state court rulings against Kalshi and ongoing litigation in multiple circuits. The agency's use of emergency powers signals escalating conflict with state authorities over who controls prediction market regulation.