The U.S. CFTC has filed a lawsuit in federal district court in New Mexico against Governor Michelle Lujan Grisham, Attorney General Raúl Torrez and other officials. The agency is seeking to block the state from applying its gambling regulations to prediction market platforms, extending a jurisdictional dispute over whether sports-related prediction contracts fall under federal derivatives oversight or state gambling law.
CFTC Takes the Dispute to Federal Court in New Mexico
The case follows New Mexico’s earlier lawsuit against Kalshi. The state accused Kalshi of offering sports betting to residents without a license and of allowing users who had not reached New Mexico’s legal gambling age of 21 to participate. New Mexico’s attorney general said legal gambling in the state can operate only under tribal-state gaming compacts or within a strict state regulatory framework.
The CFTC is taking the opposite position. It argues that platforms such as Kalshi offer federally regulated derivatives contracts, not gambling products under state law. CFTC Chair Michael Selig said New Mexico is attempting to impose state gambling law on federal derivatives exchanges that fall under the CFTC’s exclusive jurisdiction. The disagreement centers on how the products are classified and which regulator has authority over them.
Multiple State Lawsuits and Broader Prediction Market Rules
Over the past several months, the CFTC has already sued Wisconsin, Illinois, Arizona, Connecticut and New York as it seeks to establish its authority over sports prediction markets. With New Mexico now added to that sequence of disputes, the conflict between the federal regulator and state governments over sports-related prediction contracts has expanded across more jurisdictions.
The agency also proposed broader prediction market rules this week. Those rules, in overall terms, still allow sports-related contracts to exist. The clash over the boundary between prediction markets and sports betting is escalating, with states emphasizing gambling licenses, age limits and local regulatory frameworks, while the CFTC maintains that the platforms operate as federally regulated derivatives venues.