A new legal fight over prediction markets is unfolding in New Mexico after the United States and the Commodity Futures Trading Commission (CFTC) sued the state, arguing that efforts to stop Kalshi’s sports-related contracts conflict with federal law.
The complaint, filed Friday (June 12) in federal court, centers on a lawsuit brought by New Mexico Attorney General Raul Torrez on June 4. In that case, the state accused Kalshi of operating unlicensed online sports betting and sought to stop the company from offering sports-event contracts to residents.
Federal regulators say the products at issue are event contracts that qualify as swaps under the Commodity Exchange Act and trade on exchanges overseen by the CFTC. According to the filing, Congress gave the agency authority over those markets, creating a nationwide regulatory system that states cannot override.
The federal complaint argues that applying New Mexico gambling laws to those contracts interferes with the CFTC’s exclusive jurisdiction. Regulators also point to the agency’s oversight role, which includes approving exchanges, reviewing self-certified contracts and pursuing enforcement actions.
Growing opposition to Kalshi in New Mexico as the CFTC steps in
The federal case arrives amid mounting pressure on Kalshi from both state officials and tribal governments.
Earlier this year, the Mescalero Apache Tribe, Pueblo of Isleta, Pueblo of Pojoaque and Pueblo of Sandia filed a separate federal lawsuit claiming Kalshi’s sports contracts amount to illegal online sports betting on tribal lands. The tribes contend the products resemble traditional sportsbook wagers and should be treated as Class III gaming under the Indian Gaming Regulatory Act.
“Bookmakers have been providing the same service as Kalshi since at least the late 1700s,” the complaint states.
The tribal lawsuit also argues that Kalshi lacks tribal authorization and permits participation by users who are younger than the minimum age allowed under tribal gaming agreements. Tribal regulators say the company’s offerings closely mirror moneyline bets, point spreads, totals, parlays and proposition wagers.
Meanwhile, New Mexico’s state lawsuit alleges Kalshi marketed itself as a legal sports-betting platform while operating outside the state’s licensing framework.
“Despite looking like a sportsbook, acting like a sportsbook, and proverbially quacking like a sportsbook, neither Kalshi nor any of its subsidiaries have sought licensure from New Mexico’s Gaming Control Board or otherwise abided by the State’s laws governing gambling and gaming within its borders,” the complaint states.
Torrez said the case is intended to protect consumers, gaming regulations and tribal interests.
“New Mexico has a longstanding and carefully balanced system for regulating gaming that protects consumers, ensures accountability, and respects tribal sovereignty,” said Attorney General Torrez in a separate release.
Federal regulators say similar disputes have emerged in several other states. Their lawsuit asks the court to declare that New Mexico gambling laws cannot be applied to transactions on CFTC-regulated exchanges and to block state officials from investigating or enforcing those laws against federally regulated event-contract markets.
Featured image: CFTC / Canva
