CFTC Sues New Mexico Over Kalshi Prediction Market Crackdown

CFTC sues New Mexico to stop state gaming laws targeting Kalshi as nine states now clash over federal prediction market authority.

The Commodity Futures Trading Commission has filed a federal lawsuit against New Mexico. The suit targets the state’s attempt to apply gaming laws against CFTC-registered prediction markets. 

At the center of the dispute is KalshiEX LLC, a federally regulated exchange. New Mexico had sued Kalshi in state court just days earlier. The CFTC moved swiftly to block that effort.

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New Mexico’s original complaint accused Kalshi of running unlawful online sports betting. The state argued Kalshi was evading its gaming laws. It sought injunctive relief to halt Kalshi’s operations within its borders.

The CFTC fired back with a federal lawsuit seeking a declaratory judgment. 

The commission wants the court to confirm its exclusive authority over event contracts. It also seeks a permanent injunction blocking New Mexico from enforcing its preempted state laws against CFTC registrants.

CFTC Chairman Michael S. Selig addressed the matter directly on social media. He said New Mexico was attempting to nullify black letter law and decades of judicial precedent. 

Selig stated that the CFTC would continue to defend its jurisdiction over commodity derivatives.

New Mexico is the latest state seeking to nullify black letter law and decades of precedent by imposing state gaming laws on federally regulated derivatives exchanges subject to the @CFTC’s exclusive jurisdiction. We’ll continue to defend our jurisdiction over commodity… https://t.co/iWdelwTQ4n

— Mike Selig (@ChairmanSelig) June 12, 2026

Commodity Exchange Act at the Core of the Legal Battle

The CFTC anchors its case in the Commodity Exchange Act. 

Under that law, the commission holds clear and longstanding exclusive jurisdiction over event contracts. The act also preempts state laws targeting designated contract markets.

Kalshi operates as a CFTC-registered contract market. Any state-level enforcement against it would, according to the CFTC, directly conflict with federal law. 

The commission’s position is that states cannot regulate what Congress has already assigned to a federal body.

This legal framework has been tested before. The CFTC has been consistent in invoking preemption doctrine across similar disputes in other states.

New Mexico Joins a Growing List of States Challenging Kalshi

New Mexico is not alone in this push. The CFTC has now faced similar challenges from Arizona, Connecticut, Illinois, New York, Minnesota, Rhode Island, and Wisconsin. 

New Mexico becomes the ninth state to clash with the commission over the regulation of prediction markets.

The pattern signals a broader friction between state gaming regulators and federally licensed prediction market operators. States have largely framed the contracts as sports betting products. The CFTC insists they are commodity derivatives under its watch.

The CFTC said the lawsuit reaffirms its ongoing campaign to preserve exclusive jurisdiction over its registered prediction markets. With nine states now in the picture, the legal landscape for prediction markets in the U.S. remains unsettled.