TLDR
- Federal regulators initiated legal proceedings against New Mexico to prevent state enforcement of gaming regulations against Kalshi’s prediction market operations.
- State officials launched their own legal action against Kalshi earlier, alleging unlicensed sports wagering operations and minor participation.
- Federal authorities maintain they hold sole regulatory power over event-based contracts through commodity trading legislation.
- New Mexico represents the sixth state facing federal legal challenges in recent months, joining Wisconsin, Illinois, Arizona, Connecticut, and New York.
- Indigenous gaming operators in New Mexico separately initiated litigation against Kalshi in May citing economic and regulatory concerns.
Federal commodity regulators have initiated legal proceedings against New Mexico officials in an expanding jurisdictional dispute over prediction market oversight and sports-related event contracts across America.
The legal action, submitted Friday to the U.S. District Court for the District of New Mexico, identifies Governor Michelle Lujan Grisham, Attorney General Raúl Torrez, and additional state authorities as respondents.
Federal authorities are requesting judicial intervention to prevent New Mexico from enforcing state-level gaming statutes against Kalshi, a prediction market operator under federal regulatory oversight.
This development comes days after New Mexico’s top prosecutor filed litigation targeting Kalshi. State allegations include unauthorized internet-based sports wagering, absence of required state licensing, and permitting participation by individuals younger than 21 years old.
According to Attorney General Torrez, Kalshi circumvented the state’s gaming framework “while offering online sports betting within the state,” emphasizing that the legal action seeks “to protect the integrity of our laws, our regulatory system, and most importantly, consumers.”
Federal Regulators Assert Preemptive Authority
Federal commodity authorities contend that the Commodity Exchange Act grants the agency singular jurisdiction over derivatives trading platforms, encompassing prediction market operators such as Kalshi.
Chair Michael Selig of the CFTC characterized New Mexico as “the latest state seeking to nullify black letter law and decades of judicial precedent by imposing state gaming laws on federally regulated derivatives exchanges.”
The regulatory body emphasized in its filing that the federal government maintains “a statutorily protected interest in maintaining exclusive jurisdiction” over transactions conducted on designated contract markets.
This marks another chapter in an ongoing pattern. The CFTC has pursued comparable litigation against Wisconsin, Illinois, Arizona, Connecticut, and New York over recent months.
Indigenous Gaming Interests and Congressional Scrutiny Add Complexity
The New Mexico conflict extends beyond state-federal tensions. Multiple pueblos and one tribal nation in New Mexico launched independent federal litigation against Kalshi during May. Their claims center on prediction platform sports betting eroding tribal gaming income that supports educational institutions and community services.
State documentation indicates New Mexico experiences among the nation’s most severe problem gambling prevalence rates.
Additionally, Kalshi faces congressional investigation from a U.S. House committee examining potential insider trading violations, compounding regulatory challenges for the company.
Meanwhile, federal commodity regulators recently introduced proposed regulations that would maintain authorization for sports wagering support on regulated platforms. The agency additionally greenlit Hyperliquid perpetual futures trading on Kalshi, demonstrating continued platform expansion despite ongoing state conflicts.
Governor Lujan Grisham’s administration has not issued a statement regarding the federal lawsuit.
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