CFTC Keeps Kalshi Open Amid New York’s $36B Lawsuit
The CFTC used emergency authority Tuesday to order Kalshi to remain open after New York sued the prediction market for more than $36 billion, calling its event contracts illegal gambling.
The Commodity Futures Trading Commission on Tuesday ordered prediction market Kalshi to remain open under the agency’s emergency authority while state legal actions proceed. The CFTC said it acted to preserve orderly interstate derivatives markets after New York filed a lawsuit seeking more than $36 billion and alleging illegal gambling.
CFTC Chairman Michael S. Selig criticized New York, arguing Congress did not intend derivatives exchanges to be regulated through differing state gaming laws. He described Kalshi as a financial exchange that matches bids and offers across state lines and sends trades to a clearinghouse that backs customer transactions nationwide.
New York’s suit, filed last month, accuses Kalshi of offering unlawful wagers on event outcomes. In July Minnesota moved to ban prediction markets, but a Minneapolis judge temporarily blocked that ban after actions by the CFTC and Kalshi. Arizona, Massachusetts, Michigan, Nevada, Ohio, Wisconsin, Washington and several Native American reservations in California have taken regulatory or legal steps to limit prediction markets.
The CFTC has filed lawsuits against Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin seeking to stop state or local enforcement against firms the agency regulates. The agency said it invoked emergency authority to prevent enforcement actions that would close platforms while related litigation continues.
Kalshi, founded in 2021, offers contracts that let users trade on outcomes in sports, entertainment, elections and cultural events. Government officials and advocacy groups have raised concerns about election integrity, fraud, youth exposure to gambling and the ethics of markets tied to geopolitical or military events. Kalshi maintains it operates as a federally regulated financial market for event contracts.
The CFTC’s intervention highlights a broader legal dispute over whether prediction platforms are federal financial exchanges or unlawful gambling operations under state law. The agency emphasized the interstate nature of trading and the role of clearinghouses in managing counterparty risk. Ongoing cases in multiple jurisdictions are expected to determine the legal status of event-contract markets and the reach of state gaming laws.
Articles by this author
