TLDR
- The CFTC used emergency authority to order Kalshi to keep operating despite a New York lawsuit.
- New York Attorney General Letitia James is suing Kalshi over its sports event contracts.
- New York is seeking a nationwide restraining order and more than $36 billion in damages.
- The CFTC says it holds exclusive jurisdiction over event contracts across the country.
- The order gives Kalshi relief just weeks before the NFL regular season starts.
The US Commodity Futures Trading Commission ordered Kalshi to keep operating this week. The move comes as the prediction market platform faces a lawsuit from New York state.
The CFTC used its emergency authority under the Commodity Exchange Act to make the order. It said the lawsuit itself created a risk to fair and orderly trading.
Kalshi told the CFTC in early August that the case could cause a market emergency. The company asked the federal agency to step in and protect its operations.
New York’s Lawsuit Against Kalshi
New York Attorney General Letitia James filed the lawsuit on July 31. She claims Kalshi runs an illegal, unlicensed gambling business.
The lawsuit points to Kalshi’s contracts tied to sports, elections, and culture. New York wants a court to stop these contracts nationwide.
The state is asking for more than $36 billion in damages and penalties. That includes a fine equal to three times what New York says Kalshi earned in the state.
New York also wants $100,000 for every unauthorized sports bet offered in the state. The case is still pending in federal court.
Kalshi argues that states cannot shut down a business that holds a federal license. The CFTC backs this view and says it has sole authority over these markets.
CFTC Chair Michael Selig said Congress never intended derivatives exchanges to deal with different rules in every state. He said New York has “no business regulating these interstate financial markets.”
A federal judge already denied Kalshi’s request to block New York’s gambling laws on July 7. An appeals court also turned down a request for temporary relief.
What the Order Means for the NFL Season
The CFTC’s order does not end the lawsuit. It simply lets Kalshi keep running its sports contracts while the legal fight continues.
The timing matters because the NFL regular season starts soon. Sports betting activity tends to rise sharply once football season begins.
The CFTC also filed its own request for a restraining order. It wants to stop New York from taking action against federally registered prediction markets.
This is not the first clash between the CFTC and New York on this issue. In April, the CFTC sued New York in a separate case over the same jurisdiction question.
A judge in that case denied the CFTC’s request for a restraining order in July. The judge said the agency had not shown a strong chance of winning that case.
The fight is not limited to New York. The CFTC said it has taken legal action against eight other states to defend its authority over event contracts.
The core question in all these cases is the same. It is whether federal law overrides state gambling laws for contracts traded on regulated exchanges.
For now, Kalshi can keep offering its sports contracts as the NFL season approaches. The larger legal question about who regulates these markets remains unresolved.
