CFTC Orders Kalshi to Ignore Court Ruling in New York

The Commodity Futures Trading Commission is once again refusing to bow to state gambling laws.

The federal regulator has ordered Kalshi to continue operating in New York, despite the state’s lawsuit against the platform. It argued that the state’s legal actions are unwarranted and an attempt to damage a perceived rival to the massive New York sports betting market.

Last month, a New York court ruled that the state could enforce its gambling laws for Kalshi’s prediction market platform. The CFTC has continued to maintain that it has sole authority to regulate the growing industry, giving it the confidence to once again push back against a court order.

“New York intends to make event contract derivatives waste away under its iron curtain of state gaming laws before the courts get the chance to issue final rulings,” CFTC Chairman Michael S. Selig shared in a press release. “Congress did not intend for derivatives exchanges to be regulated under a patchwork of state gaming laws. These are financial exchanges that offer financial instruments and operate across state lines. They match the bid from a resident of one state with the offer of a resident from another state and submit the trade to a clearinghouse that backstops the transactions of customers throughout the country. New York has no business regulating these interstate financial markets. The Commission is required by law to ensure order in these markets, and that is what we have done today.”

The CFTC can issue emergency orders when it believes states are illegally targeting registered exchanges. However, it would be forced to drop the order should New York win its lawsuit.

CFTC Continues to Escalate Fight 

While the CFTC’s order in New York is drastic, it isn’t the first time the regulator has used its emergency powers.

Earlier this summer, the CFTC issued a similar emergency order in Michigan. A court had ruled that Kalshi must halt all activities, including refunding open contracts, while the state’s lawsuit plays out. However, the regulator only ordered Kalshi to keep existing contracts open, though the operator had already closed them.

The order in New York represents another escalation, showing the CFTC isn’t willing to abide by court rulings or state gambling laws.