CFTC invokes emergency powers to keep Kalshi operating in New York fight
The Commodity Futures Trading Commission invoked emergency powers on Tuesday, August 12, 2026 to order Kalshi to continue trading. The action came after New York sued the Manhattan-based platform late last month, alleging it is an illegal gambling operation under state law. New York seeks $36 billion in related proceedings. Kalshi had petitioned the CFTC for help after failing to convince federal judges to block the state from enforcing its gaming laws. The order escalates a jurisdictional dispute over whether states may treat federally regulated event contracts as illegal gambling.
The CFTC's emergency order keeps Kalshi trading for now, but it cannot block state court action. New York still seeks $36 billion and a nationwide ban. If the state wins an injunction, Kalshi must geofence its fourth-largest market or void existing trades. New York's lawsuit alleges Kalshi is an illegal gambling operation, echoing identical rejections in Wisconsin and Utah.
Each new loss forces Kalshi to absorb voiding risk in that state. The Second Circuit appeal remains the only path to a national standard. Polymarket holds identical CFTC registration and faces identical exposure. The federal regulator is now fighting state-by-state shutdowns, yet its emergency tool buys time, not legal protection.