US Tries to Override New York Gambling Laws, Orders Kalshi to Keep Operating

The CFTC has ordered Kalshi to keep operating in New York, claiming the state's lawsuit against the prediction market created a "market emergency." They said it acted "to ensure market stability" and "ordered the exchange to continue to operate in accordance with the Commodity Exchange Act's Core Principles." Ars Technica reports: The market emergency alleged by the CFTC is that New York Attorney General Letitia James sued Kalshi on July 31. James' lawsuit seeks a court order to permanently enjoin Kalshi "from operating an unlawful gambling business" in the state. The lawsuit also demands that Kalshi "make full restitution to customers who have engaged in betting" and pay financial penalties. "New York intends to make event contract derivatives waste away under its iron curtain of state gaming laws before the courts get the chance to issue final rulings," CFTC Chairman Michael Selig said yesterday. "Congress did not intend for derivatives exchanges to be regulated under a patchwork of state gaming laws... New York has no business regulating these interstate financial markets. The commission is required by law to ensure order in these markets, and that is what we have done today." [...] The CFTC says it alone has the power to regulate platforms such as Kalshi and Polymarket under the Commodity Exchange Act, a US law that gives the CFTC exclusive jurisdiction over designated contract markets (DCMs). "These are financial exchanges that offer financial instruments and operate across state lines," Selig said yesterday. "They match the bid from a resident of one state with the offer of a resident from another state and submit the trade to a clearinghouse that backstops the transactions of customers throughout the country."

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