CFTC Invokes Emergency Powers to Block Halt to Kalshi Operations

Crypto news outlet The Block reported on Aug. 11 that the CFTC ordered Kalshi to remain open under federal regulations. CFTC Commissioner Caroline D. Pham said in a statement that New York lacks authority to regulate this type of interstate financial market. The commission is obligated under the law to maintain order in the market, she added, and acted on that obligation on Aug. 11.

In July, New York Attorney General Letitia James sued Kalshi, alleging that it was operating an illegal gambling business. She also sought a temporary restraining order to stop Kalshi from operating in New York, along with compensation for affected users, disgorgement of profits and at least $36 billion in civil penalties. The New York attorney general's office argued that prediction markets constitute gambling under the law and exposed residents, including users younger than the state's legal gambling age of 21, to serious financial risk. The lawsuit also included tax-evasion allegations.

Kalshi asked the CFTC to intervene, saying a temporary restraining order could trigger a "market emergency." The agency agreed and exercised its emergency powers.

Over the past year, the CFTC has sued several states, including New York, Illinois, Arizona and Connecticut, as it seeks to establish exclusive jurisdiction over federally registered prediction markets. Pham has also launched a rulemaking process. Meanwhile, prediction-market platforms including Kalshi and Polymarket have expanded rapidly and are valued in the billions of dollars. Both companies support CFTC oversight.

In the U.S. Senate, there is also a push to add language to the broad Clarity Act crypto bill that would preserve state authority over sports betting and prevent prediction markets from entering that area.