New Mexico asks court to toss CFTC suit as Kalshi unwinds Michigan trades
New Mexico asked a court to dismiss a CFTC enforcement suit against the state over prediction markets, escalating a federal-state conflict. The CFTC had sued New Mexico after the state sued Kalshi last month. Separately, Kalshi told a Michigan judge it had already unwound certain residents' sports trades before a court order instructed it to do so. The moves deepen the clash between CFTC oversight and state authority over sports event contracts.
Kalshi now faces three simultaneous, contradictory commands: New Mexico's court asks it to stop, Michigan's court says the same, and the CFTC demands it keep trading. That tightenss every customer position into a compliance trap where honoring one regulator invites contempt from another. For traders, contracts they bought as federally sound may still be voided by state courts after the fact, wiping out positions they cannot hedge.
Kalshi, each new front compounds legal bills and makes geofencing individual states look cheaper than fighting on. For Polymarket, the identical CFTC-versus-state logic applies, so an adverse outcome in any single state previews its own exposure. The Second Circuit appeal is where both platforms bet on a single federal shield, but that court may not rule before more states act.