CFTC Shields Kalshi From New York Shutdown With Emergency Powers

CFTC invokes emergency authority to keep Kalshi trading

The U.S. Commodity Futures Trading Commission (CFTC) invoked its emergency authority on 11 August 2026 to order KalshiEX, LLC to keep operating in New York. Kalshi runs a federally regulated exchange for event contracts, which let users trade on the outcome of future events, from elections to sports results. The agency acted after Kalshi notified it of a market emergency triggered by New York's legal action. Under the order, Kalshi must continue operating in line with the core principles of the Commodity Exchange Act, the federal law that governs CFTC-regulated markets.

Kalshi asked federal regulators to step in

Kalshi triggered the CFTC's response itself. The exchange declared a market emergency and notified the agency after New York moved to halt its contracts. That notice let the regulator intervene under its emergency power and keep the market running. The order lets Kalshi serve New York customers while it contests the state's suit in court.

New York sued Kalshi over unlicensed sports markets

New York Attorney General Letitia James filed a complaint against Kalshi in state court on 31 July 2026. The suit asks for a temporary restraining order that would stop the exchange from offering all event contracts nationwide, not only in New York. The state is also seeking more than $36 billion in damages. New York argues that Kalshi offered sports prediction markets without a license from the New York State Gaming Commission. It says the company sidestepped the taxes that licensed casinos and mobile sports betting platforms must pay.

Selig says states cannot regulate federal markets

CFTC Chairman Mike Selig framed the order as a defense of federal authority over derivatives. He argued that individual states should not decide the fate of contracts the agency oversees, and said New York has no business regulating what he called interstate financial markets.

"Congress did not intend for derivatives exchanges to be regulated under a patchwork of state gaming laws", 11 August 2026. — Mike Selig, Chairman, U.S. Commodity Futures Trading Commission

Selig also said New York was trying to end the market before judges could rule on the underlying question.

"New York intends to make event contract derivatives waste away under its iron curtain of state gaming laws before the courts get the chance to issue final rulings", 11 August 2026. — Mike Selig, Chairman, U.S. Commodity Futures Trading Commission

The clash centers on whether contracts are gambling

The dispute turns on one question: are prediction markets financial products or gambling? The CFTC holds that event contracts are federally regulated swaps under its jurisdiction, and that federal oversight covers them across state lines. Several states counter that sports-related prediction markets act as unlicensed gambling platforms that bypass their consumer and tax rules. New York's complaint places it among the states pushing that view.

The case now moves toward a court ruling

The emergency order keeps Kalshi live in New York while the legal fight continues. Selig's statement points to pending court decisions that will settle the jurisdictional question between federal and state regulators. Kalshi plans to keep offering contracts in the state under the CFTC order until judges rule on New York's claims.

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