CFTC Targets New Mexico Over Its Lawsuit Against Kalshi

The Commodity Futures Trading Commission has set another state in its sights.

The federal regulator has filed a lawsuit against New Mexico, which earlier this month filed a lawsuit against Kalshi. The state accused the prediction market operator of illegally offering sports betting in New Mexico, but the CFTC argues the lawsuit violates the Commodity Exchange Act. As a result, it filed a lawsuit asking a court to stop New Mexico’s attack on Kalshi.

“New Mexico is the latest state seeking to nullify black letter law and decades of judicial precedent by imposing state gaming laws on federally regulated derivatives exchanges subject to the CFTC’s exclusive jurisdiction,” CFTC Chairman Michael Selig shared in a release. “As I’ve said repeatedly, the CFTC has the expertise and responsibility to protect its exclusive jurisdiction over commodity derivatives, and that’s exactly what we’ll continue to do.”

New Mexico is the eighth state to face a lawsuit from the CFTC. That list includes Arizona, Connecticut, Illinois, New York, Minnesota, Rhode Island, and Wisconsin. Like those states, New Mexico’s attorney general is a Democrat. 

The CFTC’s response comes just over a week after New Mexico filed its lawsuit against Kalshi. While state regulators view these prediction markets as illegal gambling, nearly any comprehensive Kalshi review will highlight the platform's unique position as a federally regulated financial exchange rather than a traditional sportsbook.

CFTC Faces Growing Opposition

More states have been moving forward with legal action against prediction market operators who offer sports contracts. There have been mounting concerns from the public over problem gambling and the overall integrity of sports markets, emboldening state lawmakers to take a stand.

The regulator also faced a blistering attack from US Rep. Dina Titus, who represents Las Vegas. She accused Selig of corruption as he actively protects White House’s personal financial interests in the prediction industry. 

While their words weren’t as openly aggressive, the American Gaming Association has also been openly critical of the CFTC. The lobby group has echoed the view that sports markets constitute a clear form of sports betting, a view the US public appears to share. 

The CFTC’s legal attacks have been partisan, but opposition to sports markets spans both parties. That was highlighted when a bipartisan coalition of 41 attorneys general sent a letter asking the regulator to stop protecting the industry.

Despite the growing opposition, the regulator’s lawsuit in New Mexico shows it isn’t giving up the fight quite yet.