The CFTC has sued New Mexico to block state gambling enforcement against federally regulated prediction markets, opening another court fight over sports event contracts, Kalshi, and who controls the sector.
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The Commodity Futures Trading Commission wants a federal court to stop New Mexico officials from applying state gaming laws to CFTC regulated exchanges.
The agency filed the lawsuit after Torrez sued Kalshi last week, claiming the prediction market operator runs unauthorized online sports betting through sports event contracts. Kalshi lets users trade yes or no contracts tied to event outcomes, including sports results.
CFTC chairman Michael Selig framed the case as a federal jurisdiction fight, not a gambling policy fight.
“New Mexico is the latest state seeking to nullify black letter law and decades of judicial precedent by imposing state gaming laws on federally regulated derivatives exchanges subject to the CFTC’s exclusive jurisdiction,” Selig said. “As I’ve said repeatedly, the CFTC has the expertise and responsibility to protect its exclusive jurisdiction over commodity derivatives, and that’s exactly what we’ll continue to do.”
New Mexico argues Kalshi bypassed its gambling framework. Sports betting in the state runs through brick and mortar casinos, including tribal casino operations under gaming compacts.
“The only lawful gaming in New Mexico operates either under tribal-state gaming compacts, or under strict state regulations to ensure honest gaming free from corruption, and licenses gaming operators only after they explain how they plan to address compulsive gambling,” Torrez said. “Kalshi has ignored that framework entirely while offering online sports betting within the state.”
New Mexico joins Rhode Island, Minnesota, Wisconsin, New York, Arizona, Connecticut, and Illinois as states sued by the CFTC over prediction market enforcement. The agency says those states cannot use gambling law to control federally regulated derivatives exchanges.
The CFTC lawsuit says: “New Mexico is not the first State that has attempted to invade the Commission’s exclusive jurisdiction over swaps.”
The filing also points to earlier federal rulings that blocked state action against CFTC regulated exchanges offering sports related event contracts. Prediction market operators have won several early fights against state oversight, although Nevada remains a key exception after court losses led some platforms to stop activity there.
Legal timing also helps explain the CFTC posture. The agency released proposed prediction market rules this week that would allow many sports related event contracts, while limiting contracts tied to areas such as injuries, officiating decisions, and high school sports. For state gaming regulators, that federal plan cuts close to online sports betting. For the CFTC, it fits commodity derivatives oversight.