CFTC Invokes Emergency Powers to Keep Kalshi Trading Despite New York Suit

In brief

• The CFTC has used its emergency authority to order Kalshi to keep operating, after the exchange notified the agency of a market emergency.
• Kalshi filed that notification following New York Attorney General Letitia James' lawsuit on July 31.
• The agency says it has now sued nine states over their attempts to police event contracts.

The Commodity Futures Trading Commission has invoked its emergency authority to order Kalshi to carry on trading, acting on Tuesday after the exchange itself notified the agency of a market emergency.

The order directs KalshiEX to continue operating in line with the Commodity Exchange Act's core principles, the federal standards that govern designated contract markets. Kalshi lodged its notification after New York Attorney General Letitia James sued the platform in state court on July 31, seeking a restraining order that would stop it offering event contracts anywhere in the country, plus more than $36 billion in damages.

CFTC Chairman Michael Selig cast the state's move as an attempt to kill the market before judges rule on it, saying New York wanted event contract derivatives to "waste away under its iron curtain of state gaming laws" ahead of any final ruling.