The CFTC invoked emergency powers to order prediction market Kalshi to continue operating, overriding New York's attempt to shut it down. The federal regulator asserts exclusive jurisdiction over federally regulated exchanges, challenging state gambling laws.
The CFTC's intervention aims to protect its regulatory jurisdiction over derivatives markets and ensure market stability, particularly ahead of the NFL season, while New York continues its legal challenge alleging illegal gambling.
The U.S. Commodity Futures Trading Commission (CFTC) has invoked its emergency authority to order prediction market operator Kalshi to continue operating, escalating a jurisdictional battle with New York. The CFTC's order directs Kalshi to maintain normal operations and adhere to the Commodity Exchange Act's Core Principles, countering New York's attempt 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. The state is seeking substantial damages, including at least $36 billion in compensatory damages and penalties, and previously had a request for a temporary restraining order denied by a federal judge. 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 subject to a "patchwork of state gaming laws." This confrontation is part of a broader national fight, with the CFTC having sued eight other states in addition to New York to defend its congressionally granted jurisdiction.