CFTC orders Kalshi to continue operating as New York seeks $36 billion in damages

The Commodity Futures Trading Commission invoked its emergency authority on Tuesday after KalshiEX notified the regulator of a market emergency stemming from a lawsuit filed by New York Attorney General Letitia James.

The CFTC ordered Kalshi to continue operating in accordance with the Commodity Exchange Act and its Core Principles as the dispute with New York proceeds.

New York filed its complaint against Kalshi on July 31 in state court, seeking a temporary restraining order that would prohibit the exchange from offering event contracts nationwide. The state is also seeking more than $36 billion in damages, according to the CFTC.

The Commission said the Commodity Exchange Act requires it to maintain a uniform national market for derivatives and to protect the resilience, orderliness and price discovery functions of centralized derivatives markets.

CFTC Chairman Michael S. Selig argued that derivatives exchanges should not be subject to different state gaming laws and said the Commission was acting to protect the federal jurisdiction granted to it by Congress.

The dispute comes as several states have pursued enforcement actions against CFTC regulated designated contract markets over event contracts.

The CFTC said it has filed lawsuits against Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin in an effort to defend its jurisdiction.

The Commission has also submitted amicus briefs in cases before the US Court of Appeals for the Sixth and Ninth Circuits and the Supreme Judicial Court of Massachusetts.

Kalshi operates a federally regulated prediction market where users trade contracts tied to the outcomes of real world events.