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<h3 id="summary">Summary</h3><ul><li>The CFTC ordered Kalshi to remain operational, asserting federal authority as New York seeks restrictions against the prediction market platform.</li><li>New York alleges Kalshi operates an illegal gambling business and seeks restitution, profit disgorgement, and penalties worth at least $36 billion.</li><li>State regulators dispute federal control over sports prediction contracts, while proposed Clarity Act provisions could preserve state gambling authority nationwide.</li></ul>&nbsp; The Commodity Futures Trading Commission has ordered Kalshi to keep operating, challenging New York’s effort to restrict the prediction market platform.<a href="https://www.cftc.gov/PressRoom/PressReleases/9281-26" rel="noopener noreferrer nofollow"> CFTC Chair Michael Selig</a> invoked emergency authority to preserve orderly trading across Kalshi’s federally registered markets. The action reinforces the commission’s jurisdictional position. Selig argued that New York lacks authority to regulate interstate financial markets. He maintained that federal law places responsibility for these markets with the CFTC. New York Attorney General Letitia James sued Kalshi in July, alleging that the company operates an illegal gambling business. James requested a temporary restraining order blocking Kalshi from operating across New York. Her office also seeks restitution and disgorgement of profits. Additionally, New York requested civil penalties totaling at least $36 billion. State officials classify prediction contracts as gambling products under existing laws. The complaint alleges Kalshi exposed residents to serious personal and financial risks. Regulators also raised concerns about access for people under 21. Moreover, James accused Kalshi of avoiding taxes that licensed gambling businesses must pay under state regulations. Kalshi contacted the CFTC the next day and warned that restrictions could create an “imminent market emergency.” Also Read: <a href="https://36crypto.com/former-ripple-cto-criticizes-bitcoin-knots-over-failed-bip-110-fork/" rel="noopener noreferrer nofollow">Former Ripple CTO Criticizes Bitcoin Knots Over Failed BIP-110 Fork</a> <h2 id="cftc-defends-kalshi-as-jurisdictional-fight-expands">CFTC Defends Kalshi as Jurisdictional Fight Expands</h2>The CFTC order allows<a href="https://36crypto.com/kalshi-moves-to-bring-xrp-perpetual-futures-trading-to-u-s-market/" rel="noopener noreferrer nofollow"> Kalshi</a> to operate while New York pursues its case. It also strengthens the federal regulator’s jurisdictional argument. Kalshi argues that removing New York participants could weaken liquidity across its nationwide marketplace. Lower liquidity could subsequently affect pricing elsewhere. A company spokesperson compared potential restrictions to excluding New York from Nasdaq. Kalshi argues that market disruption could extend beyond state boundaries. Consequently, the company maintains that federally registered markets require uniform national oversight instead of separate state restrictions. <h2 id="states-push-back-against-federal-prediction-market-oversight">States Push Back Against Federal Prediction Market Oversight</h2>The CFTC has pursued similar jurisdictional disputes involving Illinois, Arizona, and Connecticut. Sports prediction contracts remain central to these disagreements. Several states consider these contracts comparable to sports betting. Therefore, regulators maintain that existing state gambling laws should govern them. However, Selig argues that federal statutes provide broad <a href="https://36crypto.com/sec-vs-cftc-who-really-regulates-cryptocurrency-in-the-u-s/" rel="noopener noreferrer nofollow">CFTC</a> authority over prediction markets. He has also launched rulemaking covering the industry. Kalshi and Polymarket support federal oversight as prediction markets attract more users and achieve multibillion-dollar valuations. Meanwhile, senators and tribal gaming regulators seek Clarity Act provisions protecting state authority over sports betting. Those provisions could restrict prediction platforms from entering areas traditionally governed by state and tribal gaming rules. The Kalshi dispute highlights a wider regulatory battle that could determine how federal and state authorities divide prediction market oversight. Also Read: <a href="https://36crypto.com/dogecoin-etfs-record-zero-inflows-as-investor-demand-remains-subdued/" rel="noopener noreferrer nofollow">Dogecoin ETFs Record Zero Inflows as Investor Demand Remains Subdued</a> The post <a href="https://36crypto.com/cftc-orders-kalshi-to-stay-open-as-new-york-prediction-market-fight-escalates/" rel="noopener noreferrer nofollow">CFTC Orders Kalshi to Stay Open as New York Prediction Market Fight Escalates</a> appeared first on <a href="https://36crypto.com" rel="noopener noreferrer nofollow">36Crypto</a>.

CFTC Orders Kalshi to Stay Open as New York Prediction Market Fight Escalates

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