The U.S. Commodity Futures Trading Commission has directed Kalshi to continue offering its prediction markets in New York, stepping into a legal battle that began when the state sued the company at the end of July. The agency said it was using emergency authority to require the platform to keep operating despite New York’s effort to shut it down.
The decision adds to a widening dispute over who controls prediction markets in the U.S. The CFTC argues that these contracts fall under federal oversight because they are swaps traded on interstate financial exchanges, while New York has sought to apply its own gambling rules to Kalshi’s business in the state.
Federal agency asserts control
In announcing its move, the CFTC said federal law governs prediction markets and that state gaming laws cannot be used to regulate interstate financial exchanges. The agency’s action effectively instructs Kalshi to keep its New York markets available while the underlying court fight continues.
CFTC Chairman Mike Selig reiterated that view, saying Congress did not intend derivatives exchanges to be subject to a patchwork of state gaming laws. He argued that prediction markets operating across state lines are part of interstate financial markets, not a business New York can regulate under its gaming framework.
How the dispute escalated
New York Attorney General Letitia James filed suit against Kalshi on July 31 after a federal judge rejected the company’s attempt to block the state’s gambling enforcement law. The state has sought to stop Kalshi from operating, contending that the platform does not hold a license from the New York State Gaming Commission.
New York also alleged that Kalshi avoided the tax obligations paid by licensed casinos and mobile sports betting operators. Those claims are central to the state’s effort to characterize the platform as subject to New York’s gambling regime rather than exclusively to federal commodities oversight.
Jurisdiction remains unresolved
The legal venue for the case has not yet been settled. Kalshi asked to move the dispute into federal court, while New York sought to keep it in state court. Decisions on those motions were still pending at the time of the CFTC announcement.
That procedural uncertainty underscores the broader policy conflict between federal and state authorities over prediction markets. The CFTC’s intervention does not end the lawsuit, but it shows the agency is willing to act directly to support the continued operation of a federally regulated exchange while the courts consider the jurisdictional fight.
Related precedent and next step
The New York order follows an earlier CFTC effort involving Kalshi in Michigan, where the agency moved to help the company continue operating after a favorable state ruling. Kalshi later said it had unwound the trades that were required there.
For now, the next confirmed step is judicial: courts still need to decide whether the New York case will proceed in state or federal court, and the state’s claims against Kalshi remain unresolved as the CFTC’s emergency order stays in place.
Source: www.coindesk.com