CFTC Orders Kalshi to Operate Despite New York Gambling Lawsuit

The Commodity Futures Trading Commission (CFTC) has used its emergency authority to order prediction market operator Kalshi to continue its operations in New York. This federal intervention follows a July 31 lawsuit filed by New York Attorney General Letitia James, who alleges that Kalshi operates as an unlicensed gambling service by offering sports-related prediction markets without a license from the New York State Gaming Commission. The state is seeking civil penalties that could total approximately $36 billion, arguing that such platforms are gambling operations that should pay taxes to fund public services.

CFTC Chairman Mike Selig countered the state's position, asserting that prediction markets are interstate financial exchanges offering federally regulated swaps. Selig argued that these markets should not be subject to a patchwork of state gaming laws, and the dispute now centers on whether the case will be heard in state or federal court.

Kalshi CEO Tarek Mansour defended the company, claiming the legal pressure comes from a legacy incumbent industry threatened by disruptive markets. Mansour, who cofounded the company in 2018 with Luana Lopes Lara, recently criticized conventional business advice as mostly trash, noting that the company grew from a $2 billion valuation in June 2025 to $22 billion in May 2026 by ignoring management gurus and learning through experience.