CFTC Orders Kalshi to Keep Operating Prediction Markets in New York Amid State Lawsuit
The Commodity Futures Trading Commission used emergency authority to require Kalshi to continue offering prediction markets in New York, countering a lawsuit by the state attorney general that alleges violations of gambling regulations.
The U.S. Commodity Futures Trading Commission said on Tuesday it had invoked its emergency authority to require prediction-market platform Kalshi to keep its New York operations running, after the state filed a lawsuit seeking to halt the service. Kalshi had asked the regulator for assistance following a complaint by New York Attorney General Letitia James filed at the end of July.
The move highlights an ongoing dispute between federal and state regulators over whether sports-related prediction markets constitute gambling or federally regulated swaps. The CFTC maintains that such markets fall under its jurisdiction as derivatives exchanges, while New York argues they violate state gambling laws.
"Congress did not intend for derivatives exchanges to be regulated under a patchwork of state gaming laws," CFTC Chairman Mike Selig said in a statement. "These are financial exchanges that offer financial instruments and operate across state lines. New York has no business regulating these interstate financial markets."
New York sued Kalshi on July 31 after a federal judge denied the company's request to block the state's suit. The state alleges Kalshi operates without a license from the New York State Gaming Commission and avoids tax obligations that apply to licensed casinos and sports-betting platforms. Both parties have filed motions to move the case to federal court, and a judge has yet to rule on the requests.