CFTC sues nine states to defend Kalshi and block event-contract restrictions
The CFTC is suing nine states to block state-level restrictions on event contracts and has ordered Kalshi to keep operating in New York despite a $36 billion state lawsuit there. The agency urged federal judges to coordinate its multi-state cases as Kalshi cited a CFTC order to argue for federal preemption at the Second Circuit. New York's suit challenges Kalshi's sports event contracts under state gambling laws. The broader litigation campaign targets states including Illinois, Arizona, and Minnesota.
Kalshi's federal registration is becoming a label, not a shield. The CFTC's emergency order keeps New York contracts live for now, but it cannot block a permanent state injunction from voiding trades retroactively. Traders face contract safety that depends on geography, not federal law. The Second Circuit appeal is the only path to a uniform national standard, and that timeline stretches across months or years.
Kalshi must fight parallel battles in Wisconsin, Utah, and New York, each with separate judges and timetables. Legal spend multiplies with every front. Polymarket faces identical pressure; for both platforms, each new loss forces a binary choice: geofence the state or absorb voiding risk on open positions. A loss in New York at this scale would chill expansion regardless of other circuit outcomes.
The CFTC's emergency intervention now spans coordinated federal lawsuits against nine states and at least six federal circuits, after courts in Wisconsin, Utah, and New York already rejected Kalshi's preemption defense and the agency saw parallel losses for Polymarket and Novig in the same state-by-state collapse of federal registration as a shield.