CFTC Sues New Mexico as Federal and State Battle Over Kalshi Prediction Markets Grows

TLDR

• The CFTC filed a federal lawsuit against New Mexico to stop the state from enforcing gaming laws against prediction market platform Kalshi.
• New Mexico sued Kalshi last week, claiming it ran illegal online sports betting without a license and allowed underage users.
• The CFTC argues it has exclusive jurisdiction over event contracts under the Commodity Exchange Act.
• This is at least the sixth state the CFTC has sued in recent months, following Wisconsin, Illinois, Arizona, Connecticut, and New York.
• New Mexico tribal groups also filed their own separate lawsuits against Kalshi in May over revenue and rights concerns.

The CFTC has filed a lawsuit against the state of New Mexico in the latest clash over who controls prediction markets and sports event contracts in the United States.

The lawsuit, filed Friday in the U.S. District Court for the District of New Mexico, names Governor Michelle Lujan Grisham, Attorney General Raúl Torrez, and other state officials as defendants.

The federal agency is asking the court to stop New Mexico from applying its state gaming laws to Kalshi, a federally regulated prediction market platform.

The move follows a lawsuit filed last week by New Mexico’s attorney general against Kalshi. That complaint accused the company of running illegal online sports betting, operating without a state license, and allowing users under the age of 21 to participate.

CFTC Claims Federal Law Takes Priority

The CFTC says the Commodity Exchange Act gives the agency exclusive authority over derivatives exchanges, including prediction markets like Kalshi.

This is not the first time the CFTC has taken this position. The agency has filed similar lawsuits against Wisconsin, Illinois, Arizona, Connecticut, and New York in recent months.

Tribal Groups and Congress Also Involved

The dispute in New Mexico is broader than just the state government. Several New Mexico pueblos and one tribe filed their own federal lawsuits against Kalshi in May. They argue the platform’s sports betting predictions cut into tribal gaming revenues that fund schools and community programs.

New Mexico has some of the highest problem gambling rates in the country, according to the state’s complaint.

Separately, Kalshi is also facing an insider trading probe from a U.S. House panel, adding to the regulatory pressure on the company.

On the federal side, the CFTC recently proposed new rules that would continue to allow support for sports betting on regulated platforms. The agency also approved Hyperliquid perpetual futures on Kalshi, showing it is still moving to expand the platform’s offerings even as the state battles continue.

Governor Lujan Grisham’s office did not respond to a request for comment.

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