The Commodity Futures Trading Commission has initiated a federal lawsuit against New Mexico officials, escalating a national dispute over the regulation of prediction markets. This action follows the state’s efforts to enforce its gaming laws against Kalshi, a platform offering event-based contracts under federal oversight.
The suit, filed in the U.S. District Court for the District of New Mexico, names Governor Michelle Lujan Grisham and Attorney General Raúl Torrez as defendants. The CFTC seeks to prevent the state from applying its gaming regulations to contracts that it argues are exclusively within the agency’s domain. The case centers on Kalshi, which operates as a designated contract market and offers contracts tied to sports outcomes and other events.
Earlier this month, New Mexico authorities accused Kalshi of conducting unlicensed sports betting, claiming the platform allowed participants under the state’s legal gaming age of 21 to place bets. The state’s enforcement action prompted the CFTC to intervene, arguing that federal law under the Commodity Exchange Act grants the agency sole authority over such derivatives products.
CFTC Chair Michael Selig emphasized that federal jurisdiction over these markets is well-established by law and precedent. “New Mexico is the latest state seeking to nullify black-letter law and decades of judicial precedent,” Selig stated, reaffirming the agency’s commitment to protect its regulatory turf. His comments align with the CFTC’s broader strategy to centralize oversight of prediction markets.
The conflict in New Mexico reflects a growing pattern of state-federal friction over prediction markets. In recent months, the CFTC has challenged similar actions in Wisconsin, Illinois, Arizona, Connecticut, and New York. The agency also proposed new rules for prediction markets earlier this week. Meanwhile, state regulators maintain that sports betting falls under their authority, as seen in New Mexico’s defense of its gaming compacts and regulatory framework.
Attorney General Torrez defended the state’s position, noting that lawful gaming in New Mexico operates through established channels, including tribal compacts and state rules designed to ensure integrity and prevent corruption. He argued that Kalshi’s products circumvent these safeguards. The court will now decide whether federal oversight preempts state enforcement, a question with significant implications for the future of event-based trading.
At press time, Governor Lujan Grisham’s office had not commented on the lawsuit. The case adds to the expanding legal battle over who sets the rules for prediction markets, as both sides prepare for a contentious judicial process.