The Commodity Futures Trading Commission used emergency powers on 11 August to require Kalshi to keep operating in New York even if a state court orders a shutdown. The regulator says the lawsuit filed by New York Attorney General Letitia James threatens derivatives markets nationwide.
New York sued Kalshi on 31 July, accusing the platform of running illegal gambling without a sports betting licence. State authorities argue that Kalshi's event contracts — covering sports, elections and cultural events — fall under New York's definition of gambling. The suit seeks an injunction, refunds and penalties totalling $36bn before costs and legal fees.
CFTC called New York's attempt to shut down the exchange an 'existential threat' to its jurisdiction. Kalshi is registered federally as a designated contract market and operates globally from its New York headquarters. If the state wins a ban on operations 'within New York or for New York persons', it could block contracts for all clients wherever they are.
CFTC Chair Michael Selig said New York has no authority to regulate interstate financial markets. The regulator classified the situation as a 'major market disruption' and ordered Kalshi to continue exchange functions under federal law. CFTC warned that closure could force liquidation of open positions and distort pricing on event contracts.
This is the second time in a month CFTC has used emergency powers to protect Kalshi. In July the regulator intervened after a Michigan state court ordered the exchange to void trades by state residents.
