CFTC Sues Nine States to Block Gambling Laws Against Kalshi

Published by James Harris on June 13, 2026June 13, 2026

The CFTC has now sued nine states, most recently New Mexico, to block enforcement of state gambling laws against Kalshi and other federally regulated prediction markets, asserting exclusive jurisdiction under the Commodity Exchange Act. The agency is not just defending one platform; it is systematically building a federal preemption wall around the entire prediction market category before states can establish precedent in the other direction.

The jurisdictional argument the CFTC is making is not new, but the scale of the campaign is. Kalshi won a federal circuit court ruling in 2024 confirming its right to offer sports event contracts under CFTC oversight, and the agency is now using that precedent as a battering ram across every state that has moved against the platform. The parallel to early crypto regulation is direct: when the SEC began claiming jurisdiction over tokens in 2018, it did so one enforcement action at a time, and the absence of a coordinated federal preemption argument left exchanges and issuers exposed for years. The CFTC appears to have absorbed that lesson. New Mexico’s specific allegations, including underage participation and unlicensed operation, are the kind of consumer protection claims that tend to resonate with courts even when federal preemption arguments are otherwise strong, which is why this particular case carries more risk for Kalshi than the others.

The CFTC enforcement action count has dropped sharply under the current administration, which makes this unusually aggressive state-by-state litigation campaign the agency’s most visible regulatory activity right now.

The proposed rulemaking the CFTC released last week adds another layer. By proactively defining what sports contracts are permissible and which categories (injury props, armed conflict, terrorism) cross a line, the agency is trying to occupy the regulatory field entirely, leaving states with no gap to fill. Polymarket’s public support for that rulemaking is strategically sensible: a clear federal framework forecloses the patchwork of state licensing regimes that would otherwise fragment the market. The insider trading concerns that prompted congressional inquiry into Kalshi and Polymarket executives remain unresolved and represent the most credible argument that federal oversight alone is insufficient. George Santos betting on his own State of the Union appearance is almost a parody of the manipulation risk critics have raised, but it illustrates a real structural problem that the CFTC’s proposed rules do not fully address.

The comment period on the proposed rulemaking will likely draw significant pushback from both state attorneys general and gambling industry incumbents, and how the CFTC responds will determine whether the federal framework it is building holds once this litigation wave concludes.