CFTC backs Kalshi in New York as the agency defends federal control over event contracts

The U.S. Commodity Futures Trading Commission has used its emergency powers to let Kalshi keep operating in New York and the rest of the U.S., even as the New York attorney general sought to block the prediction platform. For high-risk operators, the real issue is not Kalshi’s product mix so much as the jurisdictional fight: when a federally licensed venue gets treated like an unlicensed sportsbook, the regulatory map stops being theoretical.

1. The New York attorney general asked for a temporary ban on Kalshi offering residents contracts tied to the outcomes of sports, cultural, and political events. Prosecutors say the platform is running illegal gambling by offering those contracts.
2. The state also wants Kalshi to pay damages, disgorge allegedly illegal profits, provide compensation, and face a penalty equal to three times the platform’s alleged total profits, plus $100,000 for each unauthorized sports betting offer in New York.
3. Kalshi says states cannot shut down a platform with a federal license. The CFTC backed that position, arguing that the Commodity Exchange Act gives it exclusive authority over swaps, including event contracts, and that derivatives and crypto derivatives must be regulated under a single federal standard.
4. The agency’s view is that Kalshi may continue operating because the Commodity Exchange Act takes priority over state gambling laws. CFTC had already asked the U.S. District Court for the Southern District of New York to keep state gambling laws from applying to CFTC-registered contract markets, but Judge Jed Rakoff rejected that request, saying the agency had not made a strong enough case.
5. The broader fight is not limited to New York. CFTC said it has sued eight other states to defend its jurisdiction over contract markets. Separately, in June, the Kentucky attorney general sued five crypto platforms over unlicensed sports betting, naming Polymarket and Kalshi, along with Kalshi partners Coinbase, Robinhood, and Webull.

For PSPs, acquirers, and banking partners, this is the kind of dispute that matters because it can change whether a product is treated as a regulated financial contract or as gambling exposure. Same user flow, very different compliance file.