CFTC Invokes Emergency Authority to Keep Kalshi Operating Amid New York’s $36B Lawsuit
Prediction markets are having their own jurisdictional showdown, and the federal government just stepped in to keep one of the biggest players running while the fight plays out.
New York Attorney General Letitia James sued Kalshi on July 31, seeking a restraining order and $36 billion in damages over what the state calls unlicensed sports prediction markets. On August 11, the CFTC invoked its Section 8a(9) emergency authority to order Kalshi to continue operating nationwide, including in New York, despite the state’s lawsuit. Separately, flight-data provider FlightAware sued Kalshi on August 10 over alleged unauthorized use of its flight-tracking data in settling cancellation-related contracts.
The CFTC’s move is a direct assertion of federal jurisdiction over a market that New York is treating as unlicensed gambling under state law, precisely the kind of federal-versus-state authority clash that has been building since prediction markets started listing sports outcomes. Emergency authority under Section 8a(9) is meant to be temporary: it keeps Kalshi operating for now, but it does not resolve the underlying legal question of which regulator actually governs these contracts.
The FlightAware lawsuit, arriving just a day earlier, adds a different kind of pressure entirely, less about gambling law and more about whether the data feeding Kalshi’s contracts was properly licensed in the first place. Together the two suits show scrutiny of the prediction-market sector widening beyond the core jurisdictional fight into how these platforms actually source and use the data behind their markets.
Kalshi is widely viewed as the bellwether for the regulated prediction-market sector, so how this specific standoff resolves, at the CFTC, in court, or through Congress, will likely set the template for how the rest of the industry, including crypto-native prediction markets, gets treated going forward.
Want to understand how prediction markets are structured and why their regulatory classification is so contested? Learn more in the Bitcoin Academy.