The CFTC filed a federal lawsuit against New Mexico officials, asserting exclusive jurisdiction over prediction markets like Kalshi and challenging state gaming laws. This action follows New Mexico's own lawsuit against Kalshi.
This dispute highlights the ongoing tension between federal and state regulatory authority over emerging financial products like prediction markets, with significant implications for innovation and consumer protection.
The U.S. Commodity Futures Trading Commission (CFTC) has filed a federal lawsuit against New Mexico Governor Michelle Lujan Grisham, Attorney General Raúl Torrez, and other state officials. The agency seeks to prevent New Mexico from applying its state gaming laws to prediction markets, asserting exclusive federal jurisdiction over these contracts under the Commodity Exchange Act.
This legal action follows a lawsuit filed by New Mexico against Kalshi, a prediction market platform, alleging it operated illegal sports betting markets and attempted to evade state gaming laws. New Mexico's lawsuit also cited high gambling-related harm rates in the state and sought to bar Kalshi from offering sports event contracts. Tribal authorities have also sued Kalshi, claiming its operations infringe on their rights and revenues.
CFTC Chair Michael Selig stated that New Mexico's actions attempt to nullify federal law and judicial precedent by imposing state gaming laws on federally regulated derivatives exchanges. The CFTC has previously taken similar legal actions against other states, including Wisconsin, to assert its authority over prediction markets. The agency views these markets as federally regulated derivatives and aims to protect its exclusive jurisdiction.
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