CFTC Sues New York Over Prediction Market Crackdown as 38 AGs Back Massachusetts Kalshi Case
A major legal battle over prediction markets intensified on April 25, 2026. The Commodity Futures Trading Commission (CFTC) sued New York state, while 38 Attorneys General backed Massachusetts in its fight against Kalshi.
38 AGs Support Massachusetts Against Kalshi
New York Attorney General Letitia James joined 37 other state AGs in filing an amicus brief in the Supreme Judicial Court of Massachusetts.
The brief urges the court to uphold a preliminary injunction that blocks Kalshi from offering sports event contracts to Massachusetts residents without a state gaming license.
“Kalshi’s event contracts for sports are just illegal gambling by another name,” said James.
The coalition argues that Kalshi’s $1 billion+ monthly trading volume — with sports betting making up 90% in peak months — should be regulated as gambling, not as CFTC-supervised swaps under the Dodd-Frank Act.
CFTC Strikes Back Against New York
Just hours later, the CFTC filed a federal lawsuit in Manhattan against New York Attorney General Letitia James, Governor Kathy Hochul, and the New York State Gaming Commission.
The agency is seeking a court order declaring that federal law preempts state gambling regulations for CFTC-registered prediction markets. It also wants a permanent injunction to stop New York from enforcing its rules against platforms like Kalshi.
CFTC Chairman Michael Selig stated that New York is ignoring federal law and decades of precedent.
Escalating State-Federal Conflict
This is the fourth state the CFTC has sued in the past three weeks, following similar actions against Arizona, Connecticut, and Illinois.
The move comes days after New York sued Coinbase and Gemini for billions of dollars.
New York officials accused the Trump administration of favoring big corporations over consumer protection and pledged to defend the state’s gambling laws.
Mixed Court Rulings So Far
Court decisions have been split nationwide:
- Wins for Kalshi in New Jersey and Tennessee
- Losses in Nevada, Maryland, Ohio, and Massachusetts
Several states that signed the amicus brief are also currently being sued by the CFTC, highlighting deep tension between state authority over gambling and federal oversight of derivatives.
What This Means
This strict approach aims to protect residents, particularly seniors, from fast-growing crypto-related scams. While it limits legitimate use of crypto ATMs, it sends a strong signal that states are serious about stopping fraud.
