CFTC wields emergency authority to defend Kalshi operations

TL;DR:

• The CFTC invoked emergency powers to order Kalshi to continue operating, amid a legal dispute with the state of New York.
• New York accuses Kalshi of operating an illegal gambling business and claims at least $36 billion in compensatory damages pending an audit.
• The confrontation is part of a national battle over whether the Commodity Exchange Act federalizes the regulation of prediction markets.

The Commodity Futures Trading Commission (CFTC) invoked its emergency powers to order prediction market Kalshi to continue operating, amid a jurisdictional escalation with the state of New York. The federal agency determined that the state’s enforcement action and its request for a temporary restraining order themselves constituted a market emergency, and instructed Kalshi to maintain its operations in accordance with its usual practices and the core principles of the Commodity Exchange Act.

The restraining order sought by New York would prevent Kalshi from offering contracts linked to sports, culture, elections and other events in the state or directed at its residents. The CFTC warned that the measure could disrupt the offering of contracts at the national level, given that the company is headquartered in New York. The agency indicated that the state claims at least $36 billion in compensatory damages pending an audit.

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