You probably didn’t need a prediction market forecast to see this one coming.
The Commodity Futures Trading Commission (CFTC) announced Friday it sued New Mexico to try to prevent state officials from enforcing their local gambling laws against federally regulated prediction markets.
- The CFTC sued New Mexico, arguing federally regulated prediction markets fall under its exclusive authority and cannot be regulated as gambling by states.
- The lawsuit follows New Mexico's legal action against Kalshi, which the state says is illegally offering online sports betting.
- The dispute is part of a broader national battle, with the CFTC and prediction market operators fighting state and tribal efforts to regulate or restrict prediction markets.
The CFTC’s lawsuit follows one filed last week against Kalshi by New Mexico Attorney General Raúl Torrez, who claims the prediction market operator is illegally offering online sports betting in the state via trading of its sports event contracts.
“New Mexico is the latest state seeking to nullify black letter law and decades of judicial precedent by imposing state gaming laws on federally regulated derivatives exchanges subject to the CFTC’s exclusive jurisdiction,” CFTC chairman Michael Selig said in a press release. “As I’ve said repeatedly, the CFTC has the expertise and responsibility to protect its exclusive jurisdiction over commodity derivatives, and that’s exactly what we’ll continue to do.”
The latest lawsuit means the federal agency has now sued eight states to protect its prediction market jurisdiction. The CFTC has also sued authorities in Rhode Island, Minnesota, Wisconsin, New York, Arizona, Connecticut, and Illinois over their attempts to rein in the exchanges and the de facto form of sports wagering they offer.
Unleash the lawyers
Those lawsuits form only part of the ongoing legal drama involving prediction markets, as operators have also launched their own lawsuits to guard against state-level regulation. Thus far, prediction market operators have been successful in avoiding that oversight, with the exception of legal losses in Nevada that led to shutdowns.
The CFTC is now actively pushing back against states in court. The agency also released proposed prediction market rules this week that show the CFTC is supportive of most sports-related event contracts.
“New Mexico is not the first State that has attempted to invade the Commission’s exclusive jurisdiction over swaps,” the CFTC’s lawsuit says. “Already, several federal courts ... have swiftly responded by issuing temporary restraining orders and preliminary injunctions barring the States from enforcing their gambling laws against CFTC-regulated exchanges that offer sports-related event contracts.”
.@CFTC Sues New Mexico as the State Becomes the Latest Attempting to Infringe on Federal Jurisdiction: https://t.co/8tt8ELoKsj
— CFTC (@CFTC) June 12, 2026
New Mexico maintains that what Kalshi is offering in the state amounts to unauthorized sports wagering. Currently, New Mexico only permits sports betting at brick-and-mortar casinos.
“The only lawful gaming in New Mexico operates either under tribal-state gaming compacts, or under strict state regulations to ensure honest gaming free from corruption, and licenses gaming operators only after they explain how they plan to address compulsive gambling,” Torrez said in a press release. “Kalshi has ignored that framework entirely while offering online sports betting within the state.”
