CFTC Sues New Mexico as Sports Prediction Market Dispute Spreads

The US Commodity Futures Trading Commission has sued New Mexico in a widening dispute over who regulates sports prediction markets.

The Block reported on June 12 that the CFTC filed suit in federal court in New Mexico against state officials, including Governor Michelle Lujan Grisham and Attorney General Raul Torrez. The agency is seeking to stop the state from applying its gambling laws to sports prediction market platform Kalshi.

New Mexico had previously moved to sanction Kalshi, alleging that it offered sports betting services without a state license and allowed users under the legal gambling age of 21 to participate. Torrez has said legal gambling in New Mexico can operate only under tribal compacts or under the state's regulatory framework.

The CFTC argues that prediction contracts tied to the outcomes of sporting events are derivatives governed by the federal Commodity Exchange Act. Oversight authority, it said, is exclusively vested in the federal government and the CFTC.

CFTC Commissioner Caroline D. Pham said New Mexico was trying to apply state gambling laws to a federally regulated derivatives exchange. The effort runs counter to decades of legal precedent and statutory framework, she added.

The CFTC has filed similar lawsuits in recent months against Wisconsin, Illinois, Arizona, Connecticut and New York.