CFTC Sues New Mexico to Block State Action Against Kalshi

The Commodity Futures Trading Commission filed a lawsuit Friday in the U.S. District Court for the District of New Mexico seeking to prevent state officials from applying New Mexico gaming laws to prediction market Kalshi. The complaint names Gov. Michelle Lujan Grisham, Attorney General Raúl Torrez and other state officials as defendants.

New Mexico charged Kalshi last week, alleging the platform offered sports betting without a state license and allowed people younger than the state’s legal gambling age of 21 to participate.

The CFTC argues federal law governs the types of contracts Kalshi lists. The complaint cites the Commodity Exchange Act and contends the agency has exclusive jurisdiction over trading in futures, options and swaps on designated contract markets. “The United States and the Commission are injured by New Mexico’s enforcement efforts,” the filing states.

CFTC Chair Michael Selig criticized New Mexico’s enforcement, calling the state an example of officials trying to apply state gaming laws to exchanges that the CFTC regulates. Attorney General Torrez, in a statement, said that “the only lawful gaming in New Mexico operates either under tribal-state gaming compacts, or under strict state regulations to ensure honest gaming free from corruption.”

The lawsuit follows similar federal actions in Wisconsin, Illinois, Arizona, Connecticut and New York where the CFTC has challenged state efforts to regulate prediction markets tied to sports outcomes. The agency also recently proposed rulemaking to clarify how prediction markets would operate under federal rules while allowing certain sports-related contracts to trade under CFTC oversight.

Kalshi operates a platform that lists event-based contracts, including some tied to sports results. The central legal question in the case is whether those contracts are governed as derivatives under the Commodity Exchange Act or as gambling under state law.

The case will proceed in federal court, where judges will decide if New Mexico may enforce its gaming laws against Kalshi or if the CFTC’s asserted exclusive jurisdiction preempts the state action. Gov. Lujan Grisham’s office did not immediately respond to a request for comment.