CFTC Used Emergency Powers to Keep Kalshi Operational in Dispute with New York

cryptonews.ruPubblicato 2026-08-12Pubblicato ultima volta 2026-08-12

Introduzione

The U.S. Commodity Futures Trading Commission (CFTC) has used emergency powers to order prediction market Kalshi to remain operational amid a legal dispute with New York state. New York alleges Kalshi is operating an unlicensed gambling business by offering event contracts related to sports, elections, and culture. The state sought a temporary restraining order to halt this activity, which the CFTC argued would create a market emergency, potentially stopping Kalshi from offering any event contracts nationwide as it is based in New York. The CFTC asserts that the Commodity Exchange Act gives it exclusive jurisdiction over swaps traded on designated contract markets, which includes the event contracts Kalshi lists. It argues Congress intended to prevent a "patchwork of state gambling laws" from affecting federally regulated derivative exchanges. This clash is part of a broader national debate on whether federal law preempts state gambling laws for such contracts. While a federal judge in a related New York case recently denied Kalshi's motion for a preliminary injunction, finding state gambling laws were not preempted for its sports contracts, the CFTC's latest emergency order allows Kalshi to continue operating. However, it does not resolve the underlying jurisdictional dispute or halt New York's lawsuit. The CFTC has filed similar lawsuits against eight other states to defend its congressionally granted jurisdiction.

The U.S. Commodity Futures Trading Commission (CFTC) on Tuesday used emergency powers and ordered the prediction market Kalshi to remain operational.

The CFTC stated that New York's law enforcement actions and request for a temporary restraining order themselves created a market emergency. The Commission directed Kalshi to continue operating normally and to comply with the Core Principles of the Commodity Exchange Act.

The temporary restraining order requested by New York would have prohibited Kalshi from conducting, from or within the state, activities related to offering contracts tied to sports, culture, elections, and other events, or offering them to state residents. The CFTC stated that the order could prevent Kalshi from offering any event contracts nationwide, as the company is based in New York. According to the CFTC, the state is demanding at least $36 billion in compensation before the case is even heard.

The CFTC stated that the Commodity Exchange Act obligates the commission to ensure a single national market for derivatives, and that severe disruptions threaten orderly trading and price formation. CFTC Chairman Michael Selig said Congress did not intend to subject derivative exchanges to a "patchwork of state gambling laws."

This confrontation is part of a broader nationwide struggle over whether the Commodity Exchange Act preempts state gambling legislation to the extent it applies to event contracts traded on federally regulated exchanges.

CFTC Challenges State Authority Over Prediction Markets

In a lawsuit filed on July 31, New York alleges that Kalshi is conducting illegal, unlicensed gambling activity by offering contracts tied to sports, elections, culture, and other events. The state seeks restitution, disgorgement of unlawfully obtained profits, damages, and the imposition of penalties, including a penalty triple Kalshi's alleged profits, as well as $100,000 for each unauthorized offer or attempt to offer sports betting in New York.

Kalshi argues that states cannot shut down a federally licensed exchange. The CFTC, in turn, asserts that the Commodity Exchange Act grants it exclusive jurisdiction over swap transactions executed on designated contract markets, including event contracts that Kalshi classifies as swaps.

On July 7, a federal judge in a separate New York case denied Kalshi's motion for a preliminary injunction. At this stage, the court concluded that New York's gambling laws are not preempted by the Commodity Exchange Act to the extent they apply to Kalshi's sports event contracts.

Related: Judge Pauses CFTC Case Against U.S. Serviceman Over Prediction Market Bets

In a separate federal case in April, the CFTC filed a lawsuit in federal court against New York to prevent the state from applying its gambling laws to CFTC-registered contract markets. Judge Jed Rakoff denied the agency's motion for an expedited temporary restraining order with prejudice, ruling that the CFTC had not demonstrated a high likelihood of success on the merits or a likelihood of irreparable harm.

The latest CFTC order directs Kalshi to continue operations but does not terminate New York's lawsuit or resolve the underlying jurisdictional dispute. It is not a judicial ruling on whether federal law preempts state application of gambling laws.

The dispute extends beyond New York. The CFTC stated it has filed lawsuits against eight other states, in addition to New York, to protect the jurisdiction granted by Congress.

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Domande pertinenti

QWhat emergency action did the CFTC take regarding Kalshi, and what was the reason given?

AThe CFTC used its emergency authority to order that the prediction market Kalshi continue operating. It stated that New York's enforcement action and request for a temporary restraining order themselves created a market emergency.

QWhat specific activities would the New York temporary restraining order have prohibited Kalshi from doing?

AThe requested order would have prohibited Kalshi from conducting, from or within New York, the activity of offering contracts related to sports, culture, elections, and other events, and from offering them to state residents.

QWhat is the core legal argument presented by the CFTC against state-level enforcement actions like New York's?

AThe CFTC argues that the Commodity Exchange Act obligates it to ensure a single national market for derivatives and that Congress did not intend for derivatives exchanges to be subjected to a patchwork of state gambling laws.

QWhat was the outcome of a prior federal judge's decision in New York on July 7 regarding Kalshi's motion?

AOn July 7, a federal judge in a different case denied Kalshi's motion for a preliminary injunction, concluding at that stage that New York's gambling laws are not preempted by the Commodity Exchange Act as applied to Kalshi's sports event contracts.

QAccording to the article, does the CFTC's latest order resolve the underlying legal dispute between it and New York?

ANo, the CFTC's order directs Kalshi to continue operating but does not terminate New York's lawsuit or resolve the core jurisdictional dispute over whether federal law preempts state gambling law application.

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