CFTC orders Kalshi to operate in NY amid legal dispute

The CFTC ordered Kalshi to keep operating in NY despite a state lawsuit, asserting federal authority over prediction markets and escalating the regulatory conflict.

The U.S. Commodity Futures Trading Commission (CFTC) has exercised its emergency authority to require prediction market platform Kalshi to continue operating in New York. This move comes despite a lawsuit from the state, which alleges illegal gambling and seeks to shut down the platform. New York's lawsuit, filed in late July, accuses Kalshi of offering unlicensed sports-related prediction markets, permitting underage participation, and evading taxes. The CFTC, however, maintains that prediction markets are federally regulated swaps and should not be governed by varying state gaming laws, emphasizing its jurisdiction over such platforms. This legal battle highlights the ongoing conflict between federal and state regulators over control of prediction markets. While New York aims to halt Kalshi's operations and impose penalties, the CFTC's intervention seeks to ensure market stability and underscores the broader regulatory struggle over event contract derivatives in the U.S. crypto and financial sectors.