CFTC backs Kalshi as New York seeks to shut down prediction markets on July 31, 2026

The Commodity Futures Trading Commission has moved to block New York’s attempt to stop Kalshi from operating, turning a state gambling case into a federal jurisdiction fight. For high-risk payments players, the useful bit is simple: when a product sits on the line between regulated exchange and gambling, the licensing venue and regulator that claim the file can matter more than the state attorney general’s label.

1. On Friday, July 31, the CFTC sued to stop New York’s effort to halt Kalshi’s operations. CFTC Chairman Michael S. Selig said in a post on X that New York Attorney General Letitia James and New York were trying to force “an unprecedented sudden shutdown of prediction markets nationwide,” and that the CFTC had already sued to stop it and would continue defending its jurisdiction.
2. New York Governor Kathy Hochul and Letitia James announced in a Friday press release that the state had sued Kalshi for running what they described as an “illegal, unlicensed gambling operation.” The state wants a court order stopping Kalshi from operating as an unlicensed gambling business in New York, plus fines equal to three times the gains it made through illegal actions, forfeiture of all illegal gains, and restitution to consumers who were harmed.
3. The state’s complaint says Kalshi’s prediction markets meet the legal definition of gambling, that the company did not get a license from the New York State Gaming Commission, and that its prediction markets are available to users aged 18 to 20. New York law requires a person to be at least 21 to participate in mobile sports betting, according to the release.
4. Kalshi told PYMNTS in an emailed statement that states cannot shut down a federally licensed exchange. The company said it is regulated by the CFTC as a Designated Contract Market. Kalshi Head of Communications Elisabeth Diana called the case “political theater” and said that state action would push New Yorkers offshore.
5. This is not Kalshi’s only regulatory fight. In a separate case with Ohio, the CFTC filed an amicus brief reaffirming its exclusive jurisdiction over prediction markets. In a May press release, the regulator said the filing lays out the congressional regulatory scheme and explains how it preempts state laws.

For PSPs, the practical takeaway is that prediction markets are now squarely in the same bucket as other high-risk products that can trigger dueling state and federal claims. If the licensing stack is not clean, or if a product’s customer base overlaps with betting-style age and access rules, the legal risk can move faster than the commercial rollout.