The Commodity Futures Trading Commission has directed Kalshi to maintain trading operations after the prediction market platform reported a market emergency. This federal intervention permits the company to continue its activities despite a lawsuit filed by New York Attorney General Letitia James.
The CFTC exercised emergency authority under the Commodity Exchange Act to enforce federal oversight of contract markets. Attorney General James seeks a restraining order to prohibit Kalshi from selling event contracts throughout the US. Her legal filing classifies the platform as an unlicensed gambling operation and demands at least $36bn in damages.
CFTC Chairman Michael Selig argued that New York is attempting to intervene before courts deliver a final verdict. He noted that exchanges facilitating cross-state bids and central clearing operate as interstate financial markets. "New York has no business regulating these interstate financial markets," Selig said.
Legal Challenges Across States
The agency has pursued legal action against nine states and submitted amicus briefs to the Sixth and Ninth Circuits, along with the Supreme Judicial Court of Massachusetts. President Donald Trump has endorsed the agency’s stance on the matter. Meanwhile, Michigan has limited Kalshi’s sports markets, and Washington obtained a preliminary injunction against the platform in July.
Earlier this year, a federal judge in New York denied Kalshi’s request for a preliminary injunction against the state gaming regulator on July 7. The court subsequently rejected the company’s motion for protection pending appeal on July 27.