CFTC sues New Mexico to block state gambling enforcement against prediction markets
The Commodity Futures Trading Commission (CFTC) sued New Mexico on Friday, June 12, 2026, seeking a declaratory judgment that federal law grants the agency exclusive authority to regulate event contracts. The suit escalates a running conflict between federal regulators and states over who governs prediction markets. The CFTC has consistently argued that the Commodity Exchange Act preempts state gaming laws for federally regulated event contracts. New Mexico's enforcement efforts against sports event contracts prompted the federal complaint. The filing follows similar CFTC litigation against Rhode Island on May 28, 2026, and an expanded Illinois lawsuit targeting state transaction fees on prediction markets. A Michigan federal judge recently ruled that sports prediction markets are not under CFTC purview in a separate case involving Polymarket.
Any court ruling affirming CFTC exclusive jurisdiction over New Mexico's enforcement would nullify the state's gambling claims against Kalshi and Polymarket in one stroke. A loss invites other states to replicate New Mexico's dual-track pressure with copycat statutes.
The CFTC has now filed parallel federal preemption lawsuits against at least four states — Minnesota, Rhode Island, New Mexico, and Kentucky — as the agency races to block state gambling enforcement before more legislatures copy the felony-ban and tax models.