CFTC sues New Mexico as prediction market jurisdiction fight expands

The Commodity Futures Trading Commission has taken New Mexico to federal court over efforts to regulate prediction markets.

The lawsuit targets state officials after New Mexico moved against Kalshi over alleged unlicensed sports betting activity. The dispute adds another chapter to the growing conflict between state regulators and federal authorities over prediction market oversight.

CFTC challenges New Mexico enforcement action

According to a complaint filed in the U.S. District Court for the District of New Mexico, the CFTC sued Gov. Michelle Lujan Grisham, Attorney General Raúl Torrez, and other officials. The agency seeks to stop New Mexico from applying state gaming laws to federally regulated prediction market contracts. 

The filing centers on Kalshi, a platform that offers event-based contracts under federal oversight. Federal regulators argue that state authorities cannot regulate products that fall under CFTC jurisdiction. The lawsuit asks the court to block enforcement actions tied to those contracts.

The legal action followed New Mexico’s move against Kalshi last week. State officials alleged that the company operated without a required license. Authorities also claimed the platform allowed participation from individuals below the state’s legal gaming age. New Mexico law sets the minimum age for gaming activities at 21 years old. Those allegations formed the basis of the state’s action against the company.

State officials target Kalshi sports contracts

Attorney General Raúl Torrez defended the state’s position in a public statement. Torrez said lawful gaming in New Mexico operates through tribal-state gaming compacts or state regulations. He stated that those rules help ensure honest gaming and prevent corruption. State officials have maintained that sports betting falls within their regulatory authority. The dispute now places those claims before a federal court.

New Mexico’s action focuses on Kalshi’s sports-related prediction contracts. State officials said the platform offered those products without meeting state gaming rules. The complaint brought by the CFTC argues that those contracts fall under federal derivatives law. The case now places Kalshi’s market structure at the center of a state-federal dispute. It also follows similar conflicts involving prediction markets in other states.

Agency cites federal law in prediction market dispute

The CFTC based its case on the Commodity Exchange Act. The agency argued that federal law grants exclusive authority over designated contract markets and related derivatives products. According to the complaint, state enforcement efforts interfere with that authority. Federal officials said the government has a protected interest in maintaining the existing regulatory framework. The filing seeks court intervention before New Mexico proceeds further.

CFTC Chair Michael Selig addressed the lawsuit in a statement. Selig said, “New Mexico is the latest state seeking to nullify black-letter law and decades of judicial precedent.” He argued that federally regulated exchanges fall under the agency’s exclusive jurisdiction. His comments aligned with the CFTC’s recent efforts involving prediction markets. The agency has continued pursuing a federal oversight approach under his leadership.

As revealed in a series of our reports, New Mexico joins several other states involved in similar disputes. In recent months, the CFTC has challenged actions in Wisconsin, Illinois, Arizona, Connecticut, and New York. The agency also proposed rulemaking related to prediction markets earlier this week. At the same time, states have continued asserting authority over sports betting activities. Gov. Lujan Grisham’s office had not responded publicly at the time of reporting.