CFTC uses emergency powers to keep Kalshi operating in New York

Key facts

• The CFTC invoked emergency powers to order Kalshi to continue operating in New York.
• New York alleges Kalshi operates an illegal, unlicensed gambling business.
• The CFTC asserts federal law preempts state gambling laws for federally regulated exchanges.
• A federal judge previously rejected New York's request for a temporary restraining order against Kalshi.
• The CFTC has intervened in similar cases in other states and sued New York over event contracts.

The U.S. Commodity Futures Trading Commission (CFTC) has invoked its emergency authority to order prediction market operator Kalshi to continue operating in New York, escalating a jurisdictional battle with the state. The CFTC's order directs Kalshi to maintain normal operations and adhere to the Commodity Exchange Act's Core Principles, countering New York Attorney General Letitia James's lawsuit seeking to halt the company's activities within the state.

New York alleges that Kalshi operates an illegal, unlicensed gambling business by offering contracts tied to various events, and is seeking at least $36 billion in compensatory damages and penalties. A federal judge had previously denied New York's request for a temporary restraining order against Kalshi. The CFTC, however, argues that New York's actions threaten the uniform national derivatives market and that the Commodity Exchange Act preempts state gambling laws when applied to federally regulated exchanges.

CFTC Chair Michael Selig stated that Congress did not intend for derivatives exchanges to be regulated under a "patchwork of state gaming laws." This confrontation is part of a broader national fight, with the CFTC having previously intervened on Kalshi's behalf in Michigan and separately sued New York over its attempts to regulate event contracts. The outcome hinges on whether federal licenses allow nationwide operation or if state regulators can impose a veto.