The U.S. Commodity Futures Trading Commission has filed a lawsuit in the federal district court of New Mexico against Governor Michelle Lujan Grisham, Attorney General Raúl Torrez and other state officials. The agency is seeking to stop New Mexico from applying its gambling laws to prediction market platforms, extending a dispute over whether sports-related prediction contracts fall under federal derivatives regulation or state gambling regimes.
New Mexico’s Case Against Kalshi
The CFTC action follows New Mexico’s 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 may operate only under tribal-state gaming compacts or within a strict state regulatory framework.
The CFTC has taken 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 federally regulated derivatives exchanges that fall under the CFTC’s exclusive jurisdiction.
A Wider Clash Between Federal and State Regulators
Over the past several months, the CFTC has also sued Wisconsin, Illinois, Arizona, Connecticut and New York as it seeks to establish its authority over sports prediction markets. The New Mexico case is the latest step in that broader contest between federal and state regulators, with the legal boundary between sports-related prediction contracts and traditional sports betting at the center of the dispute.
The agency this week also proposed broader prediction market rules. Those rules, taken as a whole, still allow sports-related contracts to exist. As states continue to press enforcement claims tied to gambling licenses, minimum participation ages and in-state operating requirements, the CFTC is maintaining that federally regulated derivatives exchanges are under its exclusive jurisdiction, intensifying the conflict over how prediction markets and sports betting should be separated under law.