New Mexico Tells Kalshi to Fold, CFTC Says 'Deal Me In' 🎲

The U.S. Commodity Futures Trading Commission filed a federal lawsuit against New Mexico on Friday, escalating a legal clash over the state's push to treat Kalshi's sports prediction contracts as unlicensed gambling. The regulator asked the court to declare that event contracts fall under its exclusive jurisdiction as "swaps" under the Commodity Exchange Act and to issue a permanent injunction blocking New Mexico from enforcing state gaming laws against CFTC-registered Designated Contract Markets.

The lawsuit targets New Mexico Governor Michelle Lujan Grisham, state Attorney General Raúl Torrez, and members of the New Mexico Gaming Control Board. It follows a state court complaint filed on June 4, in which New Mexico alleged Kalshi is offering sports betting to residents without a license, that its sports event contracts function like traditional wagers, and that the platform allowed users aged 18 to 20, below New Mexico's minimum gaming age of 21.

New Mexico is the eighth state the CFTC has sued over prediction market regulation, joining Rhode Island, Wisconsin, Minnesota, New York, Arizona, Connecticut, and Illinois. In its federal complaint, the CFTC argued that "New Mexico's attempt to prevent a CFTC-regulated DCM from offering CFTC-approved financial products intrudes on the exclusive federal scheme Congress designed to oversee United States commodity derivatives markets." CFTC Chairman Michael S. Selig said, "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 added that "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."

Former SEC and CFTC chair Gary Gensler entered the broader fight on Thursday, filing an amicus brief with the Sixth Circuit in the Ohio case against Kalshi. Gensler argued that "Congress did not include sports betting contracts within the statutory Dodd-Frank definition of swap," casting doubt on the federal regulator's claim of authority over sports event contracts. Kalshi communications officer Jacki McGavick pushed back, calling Gensler's argument "wrong" and adding, "This is the same person who insisted crypto was a security for years, and lost in court several times. It's not surprising he's wrong about what qualifies as a swap under the Commodity Exchange Act."

The North American Derivatives Exchange (Nadex) has separately sued New York to prevent enforcement against its sports event contracts, and the CFTC has proposed a framework favoring sports event contracts over gambling. The dispute lands as the FIFA World Cup drives heightened activity in sports-linked prediction markets, with the CFTC pressing its jurisdictional claim against a growing list of states.