TLDR
- Federal regulators launched legal action against New Mexico, seeking to prevent state enforcement of gaming regulations against Kalshi’s prediction market platform.
- The state initiated its own lawsuit against Kalshi days earlier, alleging unlicensed sports betting operations and minor participation.
- Federal regulators assert sole authority over event-based contracts through commodities legislation.
- New Mexico joins at least five other states facing similar federal lawsuits, including Wisconsin, Illinois, Arizona, Connecticut, and New York.
- Indigenous tribal organizations in New Mexico have launched independent legal challenges against Kalshi citing financial and regulatory concerns.
Federal commodities regulators have initiated legal proceedings against New Mexico officials in an escalating confrontation over regulatory authority for prediction markets and sports-related event contracts across America.
The complaint, submitted Friday to the U.S. District Court for the District of New Mexico, identifies Governor Michelle Lujan Grisham, Attorney General Raúl Torrez, and additional state authorities as respondents.
The commodities regulator is seeking judicial intervention to prevent New Mexico from enforcing state gambling statutes against Kalshi, a federally supervised prediction market operator.
This legal action arrives on the heels of state proceedings initiated last week by New Mexico’s top legal officer against Kalshi. Those allegations included operating unauthorized internet sports wagering, conducting business without proper state licensing, and permitting participation by individuals younger than 21.
Attorney General Torrez declared that Kalshi disregarded the state’s gambling framework “while offering online sports betting within the state” and emphasized the lawsuit seeks “to protect the integrity of our laws, our regulatory system, and most importantly, consumers.”
Federal Agency Asserts Preemptive Authority
The commodities regulator maintains that federal commodities legislation grants the commission singular jurisdiction over derivatives trading platforms, encompassing prediction market operations like Kalshi.
Commission Chair Michael Selig characterized New Mexico as “the latest state seeking to nullify black letter law and decades of judicial precedent by imposing state gaming laws on federally regulated derivatives exchanges.”
The regulatory body emphasized in its filing that the federal government possesses “a statutorily protected interest in maintaining exclusive jurisdiction” over activities conducted on designated contract marketplaces.
This represents a consistent position from the CFTC. The commission has pursued comparable legal challenges against Wisconsin, Illinois, Arizona, Connecticut, and New York throughout recent months.
Indigenous Communities and Congressional Scrutiny Add Complexity
The controversy within New Mexico extends beyond state government involvement. Multiple New Mexico pueblos and one tribal nation submitted their own federal complaints against Kalshi during May. These groups contend the platform’s sports prediction offerings diminish tribal gaming income that supports educational institutions and community initiatives.
According to the state’s legal filing, New Mexico experiences among the nation’s most elevated problematic gambling prevalence rates.
Concurrently, Kalshi faces congressional investigation regarding potential insider trading violations from a U.S. House committee, compounding regulatory challenges confronting the company.
At the federal level, commodities regulators recently unveiled proposed regulations that would maintain support for sports wagering on supervised platforms. The commission additionally authorized Hyperliquid perpetual futures contracts on Kalshi, demonstrating continued platform expansion approval despite ongoing state conflicts.
Governor Lujan Grisham’s administration has not issued a statement regarding the federal lawsuit.
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