CFTC Sues New Mexico, Continuing the Battle for Regulatory Control of Sports Prediction Markets

Odaily Planet Daily News The U.S. CFTC has filed a lawsuit in the U.S. District Court for the District of New Mexico against Governor Michelle Lujan Grisham, Attorney General Raúl Torrez, and other officials, seeking to block the state from applying its gambling regulations to prediction market platforms.

Previously, New Mexico sued Kalshi, accusing it of offering sports betting to state residents without a license and allowing users under the state's legal gambling age of 21 to participate. The New Mexico Attorney General stated that legal gambling in the state can only operate under tribal-state gaming compacts or strict state regulatory frameworks.

The CFTC, however, argues that platforms like Kalshi offer derivative contracts regulated under federal law, not gambling products under state law. CFTC Chairman Michael Selig stated that New Mexico is attempting to impose its state gambling laws on a federal derivatives exchange that falls under the exclusive jurisdiction of the CFTC.

Over the past few months, the CFTC has sued several states, including Wisconsin, Illinois, Arizona, Connecticut, and New York, to establish its regulatory authority over sports prediction markets. This week, the agency also proposed broader rules for prediction markets, which generally still allow sports-related contracts, signaling an escalating conflict between federal and state governments over the boundaries of prediction markets and sports betting.