The Commodity Futures Trading Commission (CFTC) has exercised emergency authority over KalshiEX after New York's latest legal action against the prediction-market exchange raised the prospect of disruption to its nationwide event-contract operations.
The CFTC ordered Kalshi to continue operating in accordance with the Commodity Exchange Act's Core Principles after the exchange notified the regulator of a market emergency.
The intervention follows New York Attorney General Letitia James' July 31 lawsuit, which the CFTC said seeks a temporary restraining order preventing Kalshi from offering all event contracts nationwide and more than $36bn in damages.
New York alleges Kalshi operates an unlicensed gambling business and argues its prediction markets fall within the state's legal definition of gambling. The Attorney General is seeking forfeiture of alleged illegal gains, consumer restitution and fines equal to three times gains attributed to the alleged violations.
The dispute extends an unresolved question over the regulatory boundary between federal derivatives oversight and state gambling law.
Kalshi is registered with the CFTC as a designated contract market. It has argued that the Commodity Exchange Act gives the federal regulator exclusive jurisdiction over contracts traded on its exchange.
That position suffered a setback in New York in July. A federal district court rejected Kalshi's request for a preliminary injunction against state gaming officials, finding that it had not demonstrated a likelihood of success on its argument that New York gambling laws were preempted when applied to sports-event contracts.
The court found that federal law leaves scope for states to exercise their traditional authority over gambling.
The CFTC has taken the opposite regulatory position. CFTC Chairman Michael S. Selig said Congress did not intend derivatives exchanges to operate under "a patchwork of state gaming laws," arguing that Kalshi's interstate transactions fall within federal derivatives regulation.
The regulator has become increasingly involved in state-level disputes. It said it has filed lawsuits against Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin, alongside amicus briefs in other proceedings.
The August intervention also follows a separate Michigan dispute, where the CFTC previously used emergency powers after a state court order affected Kalshi's ability to maintain positions involving Michigan users.
New York filed its current case against Kalshi on July 31, alleging the exchange had operated without a New York State Gaming Commission license while allowing users aged 18 to 20 to access prediction markets.
New York's complaint followed an October 2025 cease-and-desist demand from the New York State Gaming Commission over Kalshi's sports wagering operations
