CFTC orders Kalshi to continue offering prediction markets in New York after state lawsuit
The CFTC has invoked emergency authority to allow prediction market platform Kalshi to continue operating in New York despite a state-level lawsuit. The conflict highlights a jurisdictional battle between federal regulators, who view these platforms as financial exchanges, and state officials, who classify them as illegal gambling.
Why it matters
This case sets a critical legal precedent for the regulation of prediction markets and the extent of federal versus state authority over financial innovation.
The CFTC used its "emergency authority" to require Kalshi to continue operating after Kalshi asked for help following New York State Attorney General Letitia James' lawsuit against the company at the end of July, the federal regulator said in a Tuesday press release .
The action sets up the latest clash between the federal commodities regulator and state regulators over prediction markets. States have argued that prediction markets — at least sports-related markets — are gambling platforms that infringe on state regulations, while the CFTC has maintained it has authority over all prediction markets because they offer federally regulated swaps.
CFTC Chairman Mike Selig reiterated that stance in a statement Tuesday, saying, "Congress did not intend for derivatives exchanges to be regulated under a patchwork of state gaming laws."
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