CFTC steps in to shield Kalshi from New York shutdown attempt

The Commodity Futures Trading Commission (CFTC) has taken emergency action to prevent the New York State Attorney General's attempt to shut down Kalshi, a prediction-market exchange. The regulator warned that a forced shutdown could disrupt derivatives markets both domestically and globally. Kalshi had previously notified the CFTC on August 1 that New York's request for a temporary restraining order threatened market stability.

The CFTC's emergency order, issued on August 11, directs Kalshi to continue operating under normal business practices as the legal dispute unfolds. The order comes after New York Attorney General Letitia James filed a lawsuit alleging that Kalshi operates an illegal gambling business by offering contracts tied to various future events without a New York gaming license.

The lawsuit seeks a permanent injunction, restitution, profits disgorgement, penalties, and an accounting of customer activity. The CFTC argues that the lawsuit's scope is so broad that it would essentially bar Kalshi from listing any event contracts, effectively limiting the exchange's operations.