The US Commodity Futures Trading Commission has ordered prediction market operator Kalshi to continue operating in New York after the state sued the company over its sports prediction markets. The CFTC used its emergency authority after Kalshi asked for federal intervention following a lawsuit filed by New York Attorney General Letitia James at the end of July.
The move adds another chapter to the growing dispute between federal and state authorities over prediction markets and whether event contracts should be treated as financial derivatives or gambling.
The CFTC has maintained that prediction markets fall under federal commodities regulation because the contracts offered by platforms such as Kalshi are federally regulated swaps.
States, however, have taken a different position. New York argues that sports prediction contracts amount to gambling and that companies offering them should comply with state gaming laws.
CFTC Chairman Mike Selig defended the federal regulator’s position, arguing that financial exchanges operating across state lines should not be subject to different state gaming rules.
The dispute intensified after New York sued Kalshi on July 31. The state accused the company of offering sports prediction markets without a licence from the New York State Gaming Commission.
New York also argued that licensed gambling operators pay taxes that support areas such as public education, youth sports programmes and problem-gambling treatment.
Source: courtlistener.com
Kalshi has sought to move the legal case to federal court, while New York has asked for the case to remain in state court. The competing requests are still awaiting a judge’s decision.
The CFTC has previously taken action in similar disputes. The regulator intervened in an effort to allow Kalshi to continue operating in Michigan after a state court ruled against the company. Kalshi later said it had already unwound the trades required by the Michigan court. The latest CFTC order comes as Kalshi faces another legal challenge, this time from FlightAware, a major flight-tracking platform.
FlightAware sued Kalshi in the US District Court for the Southern District of New York over the use of its flight data and trademark in prediction markets linked to airline cancellations.
Kalshi began offering contracts tied to flight cancellations on July 14. The contracts allow users to take positions on the percentage of scheduled flights that will be cancelled during a particular period.
FlightAware claims Kalshi used its data despite an agreement that restricted commercial use. The company also argues that Kalshi used its trademark without permission.
LATEST: ✈️ FlightAware has sued Kalshi, accusing it of using its flight-tracking data without authorization to settle flight-cancellation betting markets. pic.twitter.com/Dkv9DPeydN
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