CFTC Sues New York as 38 AGs Back Kalshi Prediction Market Case

On Friday, New York Attorney General Letitia James joined a bipartisan coalition of 37 other attorneys general urging Massachusetts’ top court to uphold a preliminary injunction against Kalshi, while the CFTC simultaneously filed a lawsuit against New York to block state enforcement against CFTC-registered exchanges. The dual actions represent a major escalation in the state-federal dispute over prediction market regulation.

Attorneys General Coalition Backs Massachusetts Injunction

The amicus brief, filed in the Supreme Judicial Court of Massachusetts, asks the court to affirm a January ruling that Kalshi cannot offer sports event contracts to in-state residents without a Massachusetts Gaming Commission license. The 38 signatories—attorneys general from 37 states and the District of Columbia—span the political spectrum.

“Kalshi’s event contracts for sports are just illegal gambling by another name, and they should play by the same rules as every other licensed gambling platform,” James stated.

According to the brief, Kalshi users wagered more than $1 billion every month on the platform in 2025, with sports betting accounting for roughly 90% of that volume in certain months. The coalition argues that Kalshi’s contention that its contracts are “swaps” subject to exclusive CFTC oversight under Dodd-Frank misreads the 2010 statute, which the AGs say was crafted to address financial instruments behind the 2008 crisis, not to legalize sports gambling nationwide.

CFTC Files Counter-Suit Against New York

Hours after the amicus brief was filed, the CFTC filed its own complaint in the U.S. District Court for the Southern District of New York, naming Attorney General James, Governor Kathy Hochul, the New York State Gaming Commission, Executive Director Robert Williams, and six commissioners as defendants.

The agency is seeking a declaratory judgment that federal law grants it exclusive authority over event contracts, plus a permanent injunction blocking the state from enforcing what it calls preempted gambling laws against CFTC-registered entities.

“New York is the latest state to ignore federal law and decades of precedent by seeking to enforce state gambling laws against CFTC-registered exchanges,” CFTC Chairman Michael Selig said. The agency cited an October cease-and-desist letter Kalshi received from New York gaming regulators, alongside this week’s civil suits against Coinbase and Gemini, as conduct intruding on federal jurisdiction.

James and Hochul, both Democrats, issued a joint statement Friday evening accusing the Trump administration of “prioritizing big corporations over consumers and New Yorkers’ best interests” and pledging to defend the state’s gambling laws in court.

CFTC’s Broader Legal Strategy

The New York complaint follows nearly identical suits the agency filed against Arizona, Connecticut, and Illinois on April 2. CFTC Chairman Selig has steadily expanded the agency’s jurisdictional posture since taking over, where he sits as the only current commissioner. The agency withdrew a Biden-era proposal that would have banned political event contracts and warned state regulators in February that the agency would “no longer sit idly by.”

Mixed Court Outcomes Across States

Court outcomes have been split across jurisdictions. The U.S. Court of Appeals for the Third Circuit sided with Kalshi over New Jersey earlier this month in a 2-1 ruling, and a Tennessee federal judge granted the company a preliminary injunction in February. However, state and federal judges in Nevada, Maryland, Ohio, and Massachusetts have ruled against the platform.

Notably, Arizona, Connecticut, and Illinois—the three states the CFTC is currently suing—all signed onto Friday’s amicus brief, as did Tennessee and New Jersey, where federal courts have ruled in Kalshi’s favor. The breadth of signatories, drawn from states that have won, lost, or have yet to fight in court, underscores how broadly state attorneys general view the preemption argument as a threat to traditional state authority over gambling.

Enforcement Escalation This Week

Friday’s actions cap a week of cascading enforcement. James sued Coinbase and Gemini on Tuesday, seeking a minimum of $2.2 billion and $1.2 billion, respectively. Wisconsin’s attorney general filed civil suits Thursday against Kalshi, Polymarket, Robinhood, Crypto.com, and Coinbase, alleging their sports event contracts violate the state’s commercial gambling ban.

Company Valuation and Trading Volume

Kalshi was last valued at roughly $22 billion following a $1 billion raise disclosed in March, and recorded over $10 billion in trading volume so far this month, according to The Block’s data dashboard. TD Cowen analyst Jaret Seiberg has said states still appear to hold the stronger legal position, with the dispute likely heading to the Supreme Court and a resolution potentially not arriving until 2028.