CFTC supports Kalshi in New York regulatory battle as prediction market sector faces court challenges over legality.
Regulation & Gov ·
The Commodity Futures Trading Commission invoked emergency authority on Tuesday to direct Kalshi to continue operating in New York State, overriding an enforcement action by the state's Attorney General Letitia James seeking to block the platform's sports contracts. The development comes as Kalshi's revenue has doubled to a $4 billion annualized run rate and the company raises capital at a $40 billion valuation. New York characterizes sports prediction markets as unlicensed gambling that circumvents state taxation and licensing frameworks, revenues it argues should support schools and problem-gambling initiatives.
The CFTC's position frames these instruments as federally regulated swaps beyond state gaming jurisdiction. Chairman Mike Selig has stated Congress did not intend for derivatives exchanges to fall under a fragmented state-by-state regulatory structure, describing New York's approach as an attempt to throttle interstate financial markets. This marks the third intervention by the regulator for Kalshi, following similar actions in Michigan, though an initial court ruling already went against the platform's effort to halt the New York lawsuit.
The core legal question remains unresolved: whether a federal derivatives license grants nationwide operating authority or whether individual states retain independent regulatory veto power. The underlying litigation continues without final resolution, even as Kalshi's expanding revenue stream and rising valuation intensify the stakes for both regulators and the prediction market sector.