CFTC invokes emergency powers to keep prediction market Kalshi live in New York

The Commodity Futures Trading Commission has used its emergency authority to order KalshiEX to keep operating under the Commodity Exchange Act, overriding an attempt by New York to shut down the prediction-market exchange. The move follows a July 31 complaint from New York Attorney General Letitia James, who is seeking a temporary restraining order that would bar Kalshi from offering event contracts nationwide, along with more than $36 billion in damages. Kalshi flagged the situation to the CFTC as a market emergency, triggering the regulator’s intervention.

At the heart of the fight is a jurisdictional turf war: the CFTC argues that event-contract exchanges are federally regulated interstate financial markets that match buyers and sellers across state lines and route trades to a clearinghouse, and that they cannot be governed piecemeal by individual states’ gaming laws. Chairman Michael Selig framed New York’s suit as an effort to strangle these markets under state gambling statutes before courts can rule on the merits, asserting that Congress reserved oversight of these derivatives for the federal regulator.

The dispute is part of a broader, escalating conflict. The CFTC says it has sued nine states — Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island, and Wisconsin — to defend its authority, and has filed amicus briefs in the Sixth and Ninth Circuit Courts of Appeals and Massachusetts’ highest court. The outcome will help settle whether prediction markets are treated as regulated financial instruments or as gambling, a distinction with major implications for a fast-growing corner of the fintech industry.