WASHINGTON — The U.S. Commodity Futures Trading Commission has sued New Mexico in federal court, making it the eighth state targeted by the agency in an escalating dispute over whether states can regulate federally supervised prediction markets, according to court filings and statements released by the regulator.
The lawsuit, filed on June 12, seeks to prevent New Mexico from enforcing state gaming laws against CFTC-registered prediction market operators, including KalshiEX LLC. The action followed a lawsuit filed by New Mexico in state court against Kalshi, in which state officials alleged the company’s sports-related event contracts constitute unlawful online sports betting under state law.
In its complaint, the CFTC argued that federal law grants the agency exclusive authority over event contracts and designated contract markets regulated under the Commodity Exchange Act. The regulator is seeking a declaratory judgment affirming that authority and a permanent injunction barring New Mexico from applying state gaming laws to federally regulated exchanges.
“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 S. Selig said in a statement announcing the lawsuit.
New Mexico Attorney General Raúl Torrez has argued that Kalshi’s offerings amount to unauthorized sports betting. In announcing the state's case earlier this month, Torrez said lawful gaming in New Mexico operates through tribal-state compacts or under state regulation and licensing requirements.
The dispute is part of a broader national legal battle over prediction markets, which allow users to trade contracts tied to the outcome of future events, including sports contests. The CFTC has filed similar lawsuits against several states, including Arizona, Connecticut, Illinois, Minnesota, New York, Rhode Island and Wisconsin, contending that state efforts to restrict such markets interfere with federal jurisdiction.
Federal courts have issued a series of rulings in related cases. A federal judge in Arizona temporarily blocked state enforcement actions against Kalshi, while an appeals court ruling in a separate New Jersey case found that federal law preempts certain state restrictions on CFTC-regulated prediction markets.
As of Monday, the New Mexico litigation remained pending in federal court. Details on any upcoming hearings or responses from state defendants were not immediately available.
