CFTC Countersues New Mexico Over Kalshi Sports Prediction Market Dispute
Highlights
- The U.S. CFTC has sued New Mexico for its action against Kalshi.
- The regulator argues that it holds exclusive authority over such event contracts.
- On the other hand, New Mexico believes Kalshi endangers its regulated gaming ecosystem
The U.S. Commodity Futures Trading Commission (CFTC) has filed a federal lawsuit against the state of New Mexico. It’s continuing a battle with the state over federally-regulated event markets, including sports-related prediction contracts provided by Kalshi.
US CFTC Files Lawsuit Against New Mexico
The CFTC’s lawsuit was filed in federal court Friday. It alleged New Mexico is attempting to enforce state gambling laws for exchanges regulated by the CFTC.
The agency wants to declare its exclusive jurisdiction over event contracts under the Commodity Exchange Act. Further, it aims for an injunction to stop the state from enforcing any rule against CFTC-registered platforms.
The battle comes after New Mexico Attorney General Raúl Torrez filed a lawsuit against Kalshi last week in state court. The complaint alleges the company has run illegal sports betting markets on the Internet and allegedly tried to “evade state gaming laws.” The State government has asked the courts to bar Kalshi from tendering sports event contracts to the people.
CFTC chairman Michael S. Selig said, “New Mexico is the latest state seeking to nullify black letter law and decades of judicial precedent by imposing state gaming laws on federally regulated derivatives exchanges subject to the CFTC’s exclusive jurisdiction.”
Selig added that the regulator “has the expertise and responsibility to protect its exclusive jurisdiction over commodity derivatives.”
The CFTC has been backing prediction markets against state actions. It previously sued Wisconsin for suing Coinbase, Polymarket and Kalshi.
Now, the U.S CFTC is looking to regulate new rules to govern prediction markets.
Why Did New Mexico Sue Kalshi?
According to New Mexico’s lawsuit, Kalshi’s operations pose a threat to the state’s regulated gaming system and are a cause of gambling-related harm. The lawsuit cites New Mexico’s problematic gambling rates as being much higher than the national average.
The company had ignored the state’s gambling system “while offering online sports betting within the state,” Torrez said. He added that the lawsuit aims “to protect the integrity of our laws, our regulatory system, and most importantly, consumers.”
The war has also attracted tribal authorities to the general conflict. Several New Mexico pueblos and one tribe filed their own lawsuits against Kalshi in May in federal court. They claimed that its sports betting predictions infringe on the rights and revenues of the tribes and their schools and community programs.
In addition, Kalshi is also facing an insider trading probe via the U.S. House panel.
Meanwhile, on the other hand, CFTC has taken a softer approach. It approved the Hyperliquid perpetual futures on Kalshi
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