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CFTC orders Kalshi to keep operating amid New York prediction-market case
The regulator warned that New York’s request for temporary relief could halt Kalshi event contracts nationwide and leave it facing more than $36 billion in damages.
The U.S. Commodity Futures Trading Commission ordered KalshiEX LLC to keep operating under the Commodity Exchange Act’s Core Principles after the prediction-market exchange said New York’s enforcement effort created a market emergency, according to CryptoSlate.
The dispute centers on a July 31 lawsuit by New York Attorney General Letitia James alleging Kalshi offers sports event contracts without a license from the New York State Gaming Commission, with the state arguing the platform should be treated as an unlicensed gambling business.
New York is asking the court for temporary relief that could prevent Kalshi from offering event contracts nationwide, as well as remedies that include surrendering gains tied to the alleged violations, restitution to affected consumers, and penalties equal to three times those gains, CryptoSlate reported. The exchange told the CFTC the request could expose it to more than $36 billion in damages.
CFTC Chairman Michael Selig rejected New York’s approach, arguing Congress intended for federally regulated derivatives exchanges to be governed by federal oversight rather than a patchwork of state gambling laws. CryptoSlate also noted that the CFTC has escalated its broader fight with states over prediction markets, including lawsuits against Arizona, Connecticut, and Illinois.