#CFTCOrdersKalshiToKeepOperating CFTC Orders Kalshi to Keep Operating Despite New York Lawsuit
A major jurisdictional fight between federal and state regulators just escalated. The Commodity Futures Trading Commission (CFTC) has invoked its emergency authority to order prediction market platform Kalshi to keep operating in New York โ directly overriding an attempt by the state to shut it down.
What Happened
On July 31, New York Attorney General Letitia James sued Kalshi, accusing the platform of running an illegal gambling operation through its event contracts. New York is reportedly seeking as much as $36 billion in damages โ a figure well above Kalshi's own $22 billion valuation.
In response, Kalshi told the CFTC that the lawsuit was creating a "market emergency." On August 11, the CFTC stepped in, using its Section 8a(9) emergency powers to direct Kalshi to keep operating in line with the Commodity Exchange Act's core principles.
Why It Matters
This isn't the CFTC's first move like this โ the agency used the same emergency authority in July after Michigan sued Kalshi, ordering the platform to keep honoring trades for Michigan residents. That case ended messily: a Michigan court still forced Kalshi to unwind those trades anyway.
The core dispute comes down to one question: are prediction markets federally regulated derivatives exchanges, or are they state-regulated gambling platforms? The CFTC insists it holds exclusive jurisdiction over event contracts tied to outcomes like sports and elections. New York argues these contracts are functionally sports betting and gambling, which falls under state law.
CFTC Chairman Mike Selig put it plainly, arguing Congress never intended for derivatives exchanges to fall under state gambling regulation.
The Bigger Picture
This case is now part of a broader wave of state-vs-federal battles hitting prediction markets across the country. Kalshi is also facing a separate lawsuit from FlightAware over flight-cancellation contracts, and its marketing practices are reportedly under review by the New York City .