CFTC orders Kalshi to keep operating as New York gambling case proceeds
The CFTC invoked emergency authority to direct Kalshi to continue operating, but New York’s gambling lawsuit remains unresolved.
By Renata Fuchs · Policy Reporter
· 3 min read
The Commodity Futures Trading Commission ordered Kalshi to continue operating under federal derivatives-market rules after the company reported a market emergency tied to New York’s lawsuit. The August 11 CFTC Kalshi New York order is the agency’s latest effort to assert federal control over prediction markets, though it does not settle New York’s claims that the platform is running an unlicensed gambling business.
The CFTC said KalshiEX notified the agency after New York Attorney General Letitia James filed a July 31 complaint in state court. Invoking emergency authority, the commission directed the exchange to keep operating in accordance with the Commodity Exchange Act’s core principles.
Chairman Michael Selig said the agency acted to protect market stability and maintain a uniform national derivatives market. The CFTC’s position is that platforms such as Kalshi are interstate financial exchanges offering federally regulated instruments. That is the regulator’s legal view, not a court ruling that invalidates New York gambling law.
What did the CFTC order Kalshi to do in New York?
The order told Kalshi to continue operating under the Commodity Exchange Act’s core principles after the company’s emergency notification. It did not resolve the underlying dispute over whether Kalshi’s event contracts are federally regulated derivatives or wagers subject to New York gaming rules.
New York alleges that Kalshi has operated an illegal, unlicensed gambling platform without registering with the New York State Gaming Commission. The state says customers can trade on outcomes outside their control, including sports, elections and other events, and contends those offerings meet the state definition of gambling.
According to CNBC and Reuters reporting republished by NewsNation, New York is seeking to stop the alleged conduct, obtain restitution for customers, recover alleged illegal gains and impose civil penalties. The CFTC described the case as seeking a temporary restraining order that would bar Kalshi from offering event contracts nationwide and more than $36 billion in damages. That figure is the agency’s characterization of the relief sought, not an amount awarded by a court.
Why the federal-state dispute is still open
Kalshi argues that New York cannot close a federally licensed financial exchange. New York argues its gambling laws apply to the company’s offerings and that the state has authority to enforce them. The conflict reflects a wider dispute over whether sports-related event contracts are swaps within CFTC jurisdiction or sports betting regulated by states.
Kalshi had already sought preliminary federal court protection from New York enforcement. CNBC reported that a federal judge denied its request for a preliminary injunction and temporary restraining order, as well as an injunction pending appeal. Kalshi appealed and has also sought to move New York’s action into federal court; New York has argued for keeping the case in state court.
The CFTC said it has filed suits against Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin over state actions involving CFTC-regulated designated contract markets. The agency’s order gives Kalshi federal regulatory backing while the New York case and related jurisdictional disputes continue, but the available record does not show a final judicial decision on whether New York may enforce its gambling laws against the platform.
This story draws on original reporting from Ars Technica.
