CFTC orders Kalshi to continue operating prediction markets in New York

The U.S. Commodity Futures Trading Commission (CFTC) has ordered prediction market operator Kalshi to continue its operations in New York, utilizing its emergency authority. This intervention follows a lawsuit filed by New York State Attorney General Letitia James at the end of July, which sought to shut down the platform. The CFTC's action highlights a continuing dispute between federal regulators and state authorities over the classification and regulation of prediction markets.

CFTC Chairman Mike Selig emphasized the federal regulator's stance, stating that Congress did not intend for derivatives exchanges to be subject to a fragmented system of state gaming laws. He argued that these platforms offer financial instruments and operate across state lines, making them interstate financial markets beyond the purview of individual states' gaming regulations.

New York's lawsuit alleges that Kalshi is violating state gambling laws by offering sports prediction markets without the necessary license, thereby sidestepping taxes applicable to licensed gambling operations. Kalshi has sought to move the case to federal court, while New York is attempting to keep it in state court, with a judge's ruling pending.

Separately, flight-tracking company FlightAware has sued Kalshi, alleging unauthorized use of its proprietary flight data and trademark for flight cancellation prediction markets. FlightAware claims Kalshi violated license terms and ignored a cease-and-desist letter, seeking damages and an injunction.