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

The U.S. Commodity Futures Trading Commission sued New York on Friday to block state enforcement against CFTC-registered prediction market exchanges, escalating a multi-front legal battle hours after 38 state attorneys general filed a brief in Massachusetts supporting a preliminary injunction against Kalshi. The dual actions Friday represent the latest phase in a state-federal dispute over jurisdiction and regulatory authority over sports event contracts.

Massachusetts Amicus Brief and State Coalition

New York Attorney General Letitia James joined a bipartisan coalition of 37 other attorneys general and the District of Columbia in filing an amicus brief with the Supreme Judicial Court of Massachusetts on Friday. The brief urges the court to affirm a January ruling that Kalshi cannot offer sports event contracts to in-state residents without a Massachusetts Gaming Commission license.

“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,” James stated.

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. The coalition argues that Kalshi’s contention that its contracts are “swaps” subject to exclusive CFTC oversight under Dodd-Frank misreads the 2010 statute, which the attorneys general say was crafted to address financial instruments behind the 2008 crisis, not to legalize sports gambling nationwide.

CFTC Complaint Against New York State

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 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 the state from enforcing what it characterizes as preempted gambling laws against CFTC-registered entities. The CFTC cited an October cease-and-desist letter Kalshi received from New York gaming regulators, alongside civil suits against Coinbase and Gemini filed this week, as examples of state conduct it views as intruding on federal jurisdiction.

“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,” CFTC Chairman Michael Selig said in a statement.

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.

Pattern of Federal Litigation

The CFTC’s New York complaint 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 posture since taking over, withdrawing a Biden-era proposal that would have banned political event contracts and warning state regulators in February that the agency would “no longer sit idly by.”

Notably, Arizona, Connecticut, and Illinois—three states the CFTC is currently suing—signed onto Friday’s amicus brief, as did Tennessee and New Jersey, where federal courts have ruled in Kalshi’s favor.

Divided Court Outcomes

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

The breadth of the state coalition—drawn from states that have won, lost, or have yet to fight in court—underscores how broadly state attorneys general view the CFTC’s preemption argument as a threat to traditional state authority over gambling.

Week of Escalating Enforcement Actions

Friday’s dual filings cap a week of cascading enforcement activity. New York Attorney General 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’s Market Position and Analyst Outlook

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. TD Cowen analyst Jaret Seiberg has said states still appear to hold the stronger legal position, with the dispute likely heading to the Supreme Court and a resolution potentially not arriving until 2028.