CFTC Blocks State Lawsuits Against Kalshi

The US Commodity Futures Trading Commission (CFTC) has taken a stance against state lawsuits targeting predictions market platform Kalshi. On Tuesday, the CFTC exercised its emergency authority to allow Kalshi to continue operations. ## CFTC Chairman's Statement CFTC chairman Michael S. Selig has spoken out against the state lawsuits, stating that Congress did not intend for derivatives exchanges to be regulated under a patchwork of state gaming laws. Selig argued that these are financial exchanges that operate across state lines, matching bids from residents of different states and submitting trades to a clearinghouse that backstops transactions throughout the country. ## State Lawsuits Against Kalshi New York state has sued Kalshi for over $36 billion in damages, claiming that the company is running an 'illegal gambling operation' on the outcomes of events. Minnesota also placed a ban on predictions markets in July, but a Minneapolis judge blocked the ban before it came into effect on behalf of the CFTC and Kalshi. Other states, including Arizona, Massachusetts, Michigan, Nevada, Ohio, Wisconsin, Washington, and several native reservations in California, have filed lawsuits to limit the activities of prediction markets. ## CFTC's Response In response to the state lawsuits, the CFTC has filed lawsuits against Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island, and Wisconsin to stop enforcement against CFTC-regulated companies. Kalshi, founded in 2021, is a leading player in sports, events, entertainment, elections, and culture betting, which has led to controversy on issues such as election integrity, fraud, and the ethics of betting on geopolitical and military conflicts.