TLDR
- The CFTC invoked emergency authority to order prediction market platform Kalshi to keep operating in New York
- New York sued Kalshi on July 31, claiming it runs an unlicensed gambling business offering sports prediction markets
- New York is seeking at least $36 billion in damages plus penalties of up to three times Kalshi’s alleged gains
- The CFTC argues federal law gives it exclusive authority over prediction markets, overriding state gambling laws
- The dispute extends to nine states in total, with the CFTC filing suits against all of them
The CFTC stepped in Tuesday with emergency powers to keep prediction market platform Kalshi running in New York, escalating a clash between federal and state regulators over who controls the growing prediction market industry.
🇺🇸 BREAKING: The CFTC invokes emergency authority to keep Kalshi alive against New York’s $36 BILLION shutdown demand.
New York AG Letitia James sued to shut the prediction market down, calling it illegal gambling that exposed residents, including minors, to financial risk.… pic.twitter.com/XwEmDwXiwX
— Coin Bureau (@coinbureau) August 11, 2026
New York Takes Kalshi to Court
New York Attorney General Letitia James filed a lawsuit against Kalshi on July 31. The state claims Kalshi is running an illegal, unlicensed gambling operation by offering contracts tied to sports, elections, culture, and other events.
New York says Kalshi never obtained a license from the New York State Gaming Commission. Licensed casinos and mobile sports betting platforms pay taxes that fund public schools, youth sports programs, and problem gambling treatment. The state says Kalshi has been bypassing those obligations.
New York is seeking restitution, disgorgement, and a penalty equal to three times Kalshi’s alleged gains. It also wants $100,000 for each unauthorized sports wagering offer made in the state, along with at least $36 billion in compensatory damages.
The state asked a court for a temporary restraining order that would block Kalshi from offering contracts tied to sports, elections, and culture events in New York or to New York residents.
CFTC Pushes Back With Emergency Order
The CFTC said that New York’s enforcement action itself constituted a market emergency. The agency ordered Kalshi to continue operating in line with its normal practices and the Commodity Exchange Act’s core principles.
CFTC Chairman Michael Selig said Congress never intended derivatives exchanges to operate under a mix of state gambling laws. He said New York has no business regulating interstate financial markets that match buyers and sellers across state lines through a national clearinghouse.
The CFTC argues it has exclusive jurisdiction over event contracts listed as swaps on federally regulated exchanges. The agency says a New York restraining order could prevent Kalshi from offering contracts nationwide, since the company is based in the state.
Kalshi moved to transfer New York’s lawsuit to federal court. New York moved to send it back. A judge has not yet ruled on those motions.
The CFTC has also been involved in a similar fight in Michigan. Kalshi’s head of enforcement said the company had already unwound trades required by a Michigan court order before the CFTC could intervene there.
What Happens Next
The CFTC’s emergency order does not end New York’s lawsuit or settle the underlying legal question of whether federal law overrides state gambling enforcement. That question is still before the courts.
The CFTC has now filed suits against nine states in total to defend its authority over prediction markets. No final ruling has been issued in any of those cases.
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