CFTC Sues New Mexico to Block State Gaming Laws From Reaching Federally Regulated Prediction Markets

The Commodity Futures Trading Commission filed suit Thursday in federal court against New Mexico, seeking to prevent the state from applying its gaming laws to CFTC-registered prediction-market exchanges.

The CFTC's complaint seeks a declaratory judgment that federal law grants the agency exclusive authority to regulate event contracts and requests a permanent injunction barring New Mexico from enforcing state gaming statutes against its registrants. The filing comes roughly a week after New Mexico sued CFTC-registrant KalshiEX LLC in state court, alleging its sports-event contracts amount to unlawful online sports betting.

"New Mexico is the latest state seeking to nullify black letter law and decades of judicial precedent by imposing state gaming laws on federally regulated derivatives exchanges subject to the CFTC's exclusive jurisdiction," CFTC Chairman Michael S. Selig said in the press release. "The CFTC has the expertise and responsibility to protect its exclusive jurisdiction over commodity derivatives, and that's exactly what we'll continue to do."

New Mexico Attorney General Raúl Torrez filed the state-court action on June 4, alleging Kalshi operated an unlicensed sportsbook and allowed users aged 18 to 20 to participate despite the state's minimum gaming age of 21. The state sought an injunction blocking sports-related event contract trades and a declaration that such contracts qualify as sports wagering under New Mexico law.

The CFTC's position rests on the Commodity Exchange Act, which the agency says preempts state laws purporting to regulate designated contract markets. New Mexico becomes the eighth state to face federal litigation over the issue. The CFTC first sued Arizona, Connecticut, and Illinois in April, then extended its campaign to New York, Minnesota, Rhode Island, and Wisconsin. The Defiant previously covered the Wisconsin filing when it expanded the jurisdictional arc in late April.

The litigation intensifies an already crowded federal-state standoff. Former CFTC and SEC Chair Gary Gensler filed an amicus brief this week at the Sixth Circuit arguing sports prediction markets fall outside CFTC swap rules, directly contradicting the agency's own position. The CFTC separately published proposed rules on event contracts this week covering enumerated activities including sports.

The outcome of the state-court disputes and parallel federal litigation will determine whether prediction markets operate under a single federal regulatory framework or face a patchwork of state-level gaming enforcement.