KalshiEX must keep its prediction markets live in New York. The Commodity Futures Trading Commission said so on Aug. 11, 2026, invoking emergency authority after the state sued to shutter the platform as an unlicensed gambling operation.
The order marks the federal regulator’s most aggressive play in a widening fight over whether states can force their own gaming laws onto CFTC-registered contract markets. Kalshi set the action in motion by flagging a “market emergency” after New York Attorney General Letitia James took the platform to state court on July 31, Decrypt reported.
James’ petition treats Kalshi as an unlicensed gambling business across eight counts. She wants more than $36 billion in compensatory damages, restitution, and disgorgement, Cointelegraph reported. The filing asks for a restraining order to block Kalshi from offering contracts tied to sports, elections, culture, and other events within New York. On top of that, it demands penalties equal to three times Kalshi’s alleged gains plus $100,000 for every unauthorized sports-wagering offer in the state.
The CFTC order does not end the lawsuit. It does not resolve the jurisdictional dispute underneath it. What it does is direct Kalshi to keep operating under the Commodity Exchange Act’s core principles for designated contract markets. That is not the same thing as a judicial ruling on whether federal law preempts state gambling enforcement.
The commission classified the situation as an emergency because New York’s own enforcement action and restraining-order request created one. A bar in New York, where Kalshi is headquartered, could stop the exchange from offering event contracts nationwide, CoinDesk reported.
CFTC Chairman Mike Selig framed the state’s move as an attempt to kill the market before courts can rule on the merits. “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,” Selig said in a statement Tuesday. “These are financial exchanges that offer financial instruments and operate across state lines.”
Exchanges that match a bid from one state against an offer from another, then clear the trade centrally, are interstate financial venues. Not gambling operations. That was Selig’s argument. “New York has no business regulating these interstate financial markets,” he said.
New York’s case rests on a different claim. Kalshi never obtained a license from the New York State Gaming Commission, the AG’s press release says, and the company sidestepped the tax obligations that licensed casinos and mobile sports gambling platforms carry. Those taxes fund public schools, youth sports programs, and problem-gambling education.
Kalshi says states cannot shut down a federally licensed exchange. The CFTC backs that position. The Commodity Exchange Act gives the commission exclusive jurisdiction over transactions involving swaps traded on designated contract markets, it contends, and Kalshi’s event contracts qualify as swaps. That argument has not won every court. A federal judge in the Southern District of New York denied Kalshi a preliminary injunction against the state gaming regulator on July 7. New York’s gambling laws, the judge found, were not preempted by the Commodity Exchange Act as applied to Kalshi’s sports-event contracts at that stage of the litigation. He refused to extend protection pending appeal on July 27.
Kalshi has fared better elsewhere. It won in the Third Circuit over New Jersey. A judge blocked Minnesota’s prediction-market ban. Michigan restrained Kalshi’s sports markets in June. Washington won a preliminary injunction in July.
The CFTC has now sued nine states to defend its jurisdiction. It has filed amicus briefs in the Sixth and Ninth Circuits and before the Supreme Judicial Court of Massachusetts. The commission also sued New York in federal court in April, separately, to block the state from applying its gambling laws to CFTC-registered contract markets. Judge Jed Rakoff denied the CFTC’s emergency request without prejudice. The agency, he found, had not established a likelihood of success or irreparable harm.
Kalshi’s own figures, cited in the New York petition, put its valuation at $22 billion. Annualized trading volume stands at $178 billion.
The venue fight remains unresolved. Kalshi moved to transfer the state case to federal court. New York moved to send it back. Both motions await a judge’s ruling. Robert Denault, Kalshi’s head of enforcement, said in a post on X that the company had already unwound the trades required by a Michigan court order. New York has not yet publicly responded to the CFTC’s emergency order.
