CFTC Invokes Emergency Powers to Shield Kalshi From $36B NY Lawsuit
A state lawsuit seeking more than the company’s entire valuation just triggered a rare federal intervention to keep a prediction market running.
New York Attorney General Letitia James sued Kalshi on July 31, alleging the company offers sports prediction markets without a license from the state’s gaming commission and seeking over $36 billion in damages, on top of disgorgement of profits and a further penalty. Kalshi’s own reported valuation sits at $22 billion, meaning the compensatory claim alone exceeds the company’s entire worth before any additional penalties are applied.
On August 11, the Commodity Futures Trading Commission issued an emergency order under Section 8a(9) of the Commodity Exchange Act directing Kalshi to keep operating in line with the Act’s core principles, effectively shielding it from the state action while the underlying dispute plays out. The CFTC’s position is that federally regulated event contracts fall under a uniform national framework, directly at odds with New York’s view that sports-outcome contracts are gambling subject to state law.
The clash is really a proxy fight over who gets to regulate prediction markets at all, states or federal derivatives regulators, and it’s landing right as Kalshi is reportedly in talks to raise fresh capital at nearly double its current valuation. A federal-state jurisdictional fight of this size rarely resolves quickly, and every prediction market operator watching this case now has a direct stake in how it turns out.
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