CFTC Uses Emergency Powers to Maintain Kalshi’s New York Access

The U.S. Commodity Futures Trading Commission (CFTC) has invoked emergency authority to keep prediction market operator Kalshi running, arguing that New York’s efforts to restrain the platform amount to a market emergency. In an order issued Tuesday, the regulator said the federal government must ensure continuity in derivatives markets and prevent a “patchwork” of state rules from disrupting national price discovery.

The move keeps Kalshi operating while a separate legal fight continues over whether federal law—specifically the Commodity Exchange Act—preempts state gambling enforcement when event contracts are traded on federally regulated venues.

Key takeaways

• The CFTC ordered Kalshi to continue operating, citing an emergency created by New York’s request for a temporary restraining order.


• New York argues Kalshi is operating an illegal, unlicensed gambling business tied to sports, elections, culture, and other events, seeking substantial damages.


• The CFTC says the Commodity Exchange Act requires a uniform national derivatives market and gives it exclusive jurisdiction over certain transactions involving swaps on designated contract markets.


• The dispute is ongoing and does not resolve whether federal law preempts New York’s gambling enforcement.


• The CFTC said it is litigating similar jurisdictional questions beyond New York, including cases involving eight other states.

CFTC emergency order keeps Kalshi live

In the order, the CFTC said New York’s enforcement action and the state’s request for a temporary restraining order together triggered what the agency characterized as a market emergency. The regulator directed Kalshi to keep operating under its normal practices and in line with the Commodity Exchange Act’s core principles.

Importantly, the CFTC emphasized continuity in trading. It argued that major disruptions can undermine orderly markets and impede price discovery—especially in derivatives markets meant to function as a cohesive national system.

CFTC Chair Michael Selig said Congress did not intend derivatives exchanges to face a fragmented set of state gaming rules. The commission tied its emergency authority to concerns that a state-by-state approach could destabilize federal derivatives oversight.

New York’s restraining order seeks nationwide operational limits

New York’s request, as described by the CFTC, would bar Kalshi from operating in connection with contracts tied to sports, culture, elections, and other events in or from New York or directed to people in the state. The CFTC warned that because Kalshi is based in New York, the restrictions could effectively prevent the platform from offering all event contracts nationwide.

According to the CFTC, New York is seeking at least $36 billion in compensatory damages pending an accounting. The underlying state lawsuit, filed July 31, alleges Kalshi runs an illegal, unlicensed gambling business through its event-linked contracts. New York seeks restitution, disgorgement, damages, and penalties, including a penalty equal to three times Kalshi’s alleged gains and $100,000 for each unauthorized sports wagering offer or attempt in New York.

New York’s case reflects a broader theory that state gambling law applies to prediction-market style contracts—an issue that has become a central legal battleground for the emerging event-contract space.

Federal preemption and the jurisdiction fight

Kalshi has argued that states cannot shut down a federally licensed exchange. The CFTC, by contrast, maintains that the Commodity Exchange Act gives it exclusive jurisdiction over transactions involving swaps traded on designated contract markets, including event contracts that Kalshi lists as swaps.

This is not a new legal question. In a separate New York case, a federal judge denied Kalshi’s request for a preliminary injunction on July 7. At that stage, the judge found that New York gambling laws were not preempted by the Commodity Exchange Act as applied to Kalshi’s sports-event contracts.

Previously, the CFTC also sued New York in federal court in April, seeking to block the state from applying its gambling laws to CFTC-registered contract markets. In that earlier action, Judge Jed Rakoff denied without prejudice the agency’s emergency request for a temporary restraining order. The court found the CFTC had not shown a high likelihood of success on the merits or a likelihood of irreparable harm.

While Tuesday’s order directs Kalshi to continue operating, it does not decide the underlying jurisdictional dispute. The CFTC itself characterized the order as separate from a final judicial determination on whether federal law preempts state enforcement.

A nationwide regulatory dispute across multiple states

The Kalshi controversy is also being framed by the CFTC as part of a broader effort to defend federally granted authority. The agency said in its order that it has sued eight other states in addition to New York to protect what it views as congressionally granted jurisdiction.

That means the outcome of the Kalshi litigation could carry implications beyond a single company. If courts ultimately endorse the CFTC’s preemption theory, state regulators may face tighter limits when attempting to apply gambling statutes to event contracts traded on designated contract markets. If courts reject that position, enforcement could become more decentralized, potentially pushing operators to navigate divergent state regimes.

For market participants—exchanges, traders, and institutions—the practical stakes are straightforward: disruptions to listings, contract availability, or trading access can directly affect liquidity and price formation. The CFTC’s focus on “orderly trading and price discovery” suggests the regulator is trying to prevent a compliance or shutdown cascade while the legal questions play out.

For Kalshi and similarly structured platforms, the key uncertainty remains judicial. Tuesday’s CFTC order preserves operations in the short term, but it does not substitute for a court ruling on the scope of federal preemption versus state gambling enforcement.

Readers should watch next for how courts handle the preemption question on the merits and whether any additional federal or state rulings narrow (or expand) what event-contract platforms can offer during the litigation. The emergency posture may keep the platform running for now, but the core jurisdictional disagreement is still unresolved.

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