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CFTC sues New Mexico to expand litigation over prediction market jurisdiction

Legal Writer

Publish Date: Jun 15, 2026

Fact checked by: Matt Moreno

Key Points

The Commodity Futures Trading Commission has filed suit against New Mexico officials in response to state litigation involving Kalshi.
New Mexico is the eighth state in which leaders are the defendants in a similar lawsuit.
Lawsuit asks the court to enjoin New Mexico officials from taking any action against prediction market exchanges.

The United States Commodity Futures Trading Commission has expanded its efforts to dictate the terms of the regulation of prediction market exchanges by suing officials in New Mexico. This action follows New Mexico Attorney General Raúl Torrez filing suit against Kalshi in state court, alleging that Kalshi is violating the state’s gambling laws.

So far, the federal government's litigation against state officials regarding prediction market regulation has produced positive results for the agencies. All the results are tentative in anticipation of U.S. Supreme Court intervention, though.

(Gabby Jones/Bloomberg via Getty Images)

CFTC adds New Mexico to list of lawsuit targets

The Commodity Futures Trading Commission (CFTC) announced on Friday that it had filed its complaint in the U.S. District Court for the District of New Mexico “seeking to block the state’s efforts to apply state gaming laws against CFTC-registered contract markets.” The CFTC wants the court to declare that it alone has jurisdiction over prediction market exchanges and enjoin New Mexico officials like Torrez from taking action against the exchange platforms.

In its complaint, the CFTC points to Torrez’s lawsuit against Kalshi in state court as evidence of the need for the federal court to intervene. Torrez’s brief argues that Kalshi’s contracts connected to sporting events are tantamount to sports bets and therefore, Kalshi is violating state law by making the markets available.

New Mexico law bans online sports wagering and in-person sports betting outside of tribal casinos. New Mexico officials aren’t alone in being defendants in a CFTC-initiated lawsuit.

CFTC currently targeting seven other US state governments

New Mexico is the eighth U.S. state that the CFTC has sued in 2026. Most of the cases are still in the very early stages.

Arizona
Connecticut
Illinois
Minnesota
New York
Rhode Island
Wisconsin

The CFTC has secured a preliminary injunction blocking Arizona officials from enforcing state laws against Kalshi and other prediction markets. Courts have yet to rule on similar requests in all of the other cases.

When the rulings on the CFTC’s injunctive relief motions drop, they are bound to trigger appeals. Appellate court decisions will be mere preliminary steps in anticipation of a potential Supreme Court ruling to settle the legal questions with finality.

CFTC, state governments on course for Supreme Court

There are three main questions before the numerous courts weighing complaints from the CFTC and prediction market exchanges.

Does trading event contracts connected to sporting events fit the legal description of sports wagering under the relevant state laws?
To what extent, if any, does federal law governing prediction market exchanges preempt state gambling laws?
Do prediction market contracts qualify as "swaps," and if so, does federal law give the CFTC exclusive jurisdiction over them?

Complaints initiated by Kalshi against state governments have progressed further than CFTC actions. For example, New Jersey officials are already planning to appeal a decision from the U.S. Third Circuit Court of Appeals to the Supreme Court. That decision from the Third Circuit favors Kalshi in that it blocks New Jersey from enforcing a cease-and-desist order against Kalshi.

The Sixth Circuit Court of Appeals has issued an opposing opinion on similar issues in favor of Ohio officials, though. That sets the stage for the Supreme Court to eventually hear one of the cases that is rising through the appellate ranks.

The CFTC’s lawsuit against New Mexico expands those options that the Supreme Court will have to choose from.

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