The CFTC is filing a federal lawsuit against New Mexico, challenging the state’s attempt to enforce its gambling laws against federally registered prediction market platforms. The state had taken enforcement action against Kalshi, a CFTC-registered designated contract market, treating its prediction market offerings as unauthorized sports betting operations. The federal regulator, unsurprisingly, disagrees.
This marks the eighth time since April 2026 that the CFTC has hauled a state into federal court over this exact issue. New York got the treatment first on April 24, 2026. Minnesota followed on May 19, 2026. Rhode Island, Arizona, Connecticut, and Illinois have all been on the receiving end as well. New Mexico is just the latest name on what’s becoming a rather long list.
The core argument: who’s the boss
The CFTC argues that the Commodity Exchange Act gives it exclusive authority to regulate event contracts traded on designated contract markets. If a platform is federally registered to offer prediction markets, states don’t get to waltz in and call those products illegal gambling.
The CFTC is seeking both declaratory judgments and injunctions. A declaratory judgment would formally establish that federal law preempts state gambling regulations in this context. An injunction would actually stop New Mexico from enforcing its laws against platforms like Kalshi.
