CFTC Sues New York as 38 AGs Back Kalshi Prediction Market Crackdown

The U.S. Commodity Futures Trading Commission sued New York on Friday to block state enforcement against CFTC-registered prediction market exchanges, escalating a federal-state legal battle over regulatory jurisdiction. The same day, New York Attorney General Letitia James joined 37 other state attorneys general and the District of Columbia in filing an amicus brief in Massachusetts’ Supreme Judicial Court supporting a preliminary injunction against Kalshi, arguing that the platform’s sports event contracts constitute illegal gambling.

Attorneys General Coalition Position

The amicus brief, filed in the Supreme Judicial Court of Massachusetts, urges the court to affirm a January ruling prohibiting Kalshi from offering sports event contracts to Massachusetts residents without a Gaming Commission license. According to the brief, Kalshi users wagered more than $1 billion every month on the platform in 2025, with sports betting accounting for roughly 90% of that volume in certain months.

New York AG James stated: “Kalshi’s event contracts for sports are just illegal gambling by another name, and they should play by the same rules as every other licensed gambling platform.”

The coalition of attorneys general argues that Kalshi’s assertion that its contracts are “swaps” subject to exclusive CFTC oversight under the Dodd-Frank Act misinterprets the 2010 statute. According to the AGs, Dodd-Frank was designed to address financial instruments related to the 2008 financial crisis, not to legalize sports gambling nationwide at a time when federal law still prohibited states from authorizing such activity.

CFTC Legal Counteroffensive

Hours after the amicus brief filing, the CFTC filed a complaint in the U.S. District Court for the Southern District of New York naming New York Attorney General James, Governor Kathy Hochul, the New York State Gaming Commission, Executive Director Robert Williams, and six commissioners as defendants.

The agency seeks a declaratory judgment that federal law grants it exclusive authority over event contracts, plus a permanent injunction blocking New York from enforcing what it characterizes as preempted gambling laws against CFTC-registered entities.

CFTC Chairman Michael Selig stated: “New York is the latest state to ignore federal law and decades of precedent by seeking to enforce state gambling laws against CFTC-registered exchanges.” The CFTC cited an October cease-and-desist letter Kalshi received from New York gaming regulators, alongside civil suits against Coinbase and Gemini filed earlier in the week, as evidence of state action intruding on federal jurisdiction.

James and Hochul, both Democrats, issued a joint statement Friday evening accusing the Trump administration of “prioritizing big corporations over consumers and New Yorkers’ best interests” and pledging to defend the state’s gambling laws in court.

Broader Enforcement Pattern

The CFTC’s New York lawsuit follows nearly identical suits the agency filed against Arizona, Connecticut, and Illinois on April 2. CFTC Chairman Selig has steadily expanded the agency’s jurisdictional position since taking office, where he currently sits as the only active commissioner. The agency withdrew a Biden-era proposal that would have banned political event contracts and warned state regulators in February that it would “no longer sit idly by.”

Mixed Legal Outcomes Across States

Court outcomes have been divided. The U.S. Court of Appeals for the Third Circuit sided with Kalshi over New Jersey earlier this month in a 2-1 ruling. A Tennessee federal judge granted Kalshi a preliminary injunction in February. However, state and federal judges in Nevada, Maryland, Ohio, and Massachusetts have ruled against the platform.

Notably, Arizona, Connecticut, and Illinois—the three states the CFTC is currently suing—all signed the Friday amicus brief, as did Tennessee and New Jersey, where federal courts have ruled in Kalshi’s favor. This breadth of signatories, drawn from states with varying legal outcomes, underscores how broadly state attorneys general view the preemption argument as a threat to traditional state authority over gambling.

Escalating Enforcement Actions

The Friday legal actions capped a week of cascading enforcement. New York AG James sued Coinbase and Gemini on Tuesday, seeking a minimum of $2.2 billion and $1.2 billion, respectively. Wisconsin’s attorney general filed civil suits Thursday against Kalshi, Polymarket, Robinhood, Crypto.com, and Coinbase, alleging their sports event contracts violate the state’s commercial gambling ban.

Kalshi was valued at roughly $22 billion following a $1 billion raise disclosed in March and recorded over $10 billion in trading volume so far this month, according to The Block’s data dashboard.