The fight over prediction markets in the U.S. has heated up after the Commodity Futures Trading Commission (CFTC) sued New Mexico for trying to regulate Kalshi’s sports event contracts.
New Mexico says Kalshi is offering sports betting without a state license. The CFTC says Kalshi follows federal commodities law and is under its control. This dispute shows the growing conflict between state and federal regulators over who should oversee prediction markets.
New Mexico filed its case against Kalshi earlier this month, saying the platform’s sports event contracts are like regular sports bets. The state also said some underage users could access the service.
The CFTC replied that Kalshi is a federally regulated Designated Contract Market and its event contracts count as financial products under commodities law. The regulator says states cannot apply gaming laws to products already covered by federal rules.
This case is part of a bigger trend. New Mexico is now the eighth state in legal battles over prediction markets, along with New York, Arizona, Illinois, and Connecticut.
Former SEC and CFTC Chair Gary Gensler added to the debate by questioning if sports event contracts should be under federal commodities law at all. He said sports betting contracts do not match the original purpose of swap rules set by the Dodd-Frank Act.
The result of this case could shape the future of prediction markets and decide if they are seen mainly as financial products or gambling in the U.S.
.@CFTC Sues New Mexico as the State Becomes the Latest Attempting to Infringe on Federal Jurisdiction: https://t.co/8tt8ELoKsj
— CFTC (@CFTC) June 12, 2026
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