US tries to override New York gambling laws, orders Kalshi to keep operating

# US tries to override New York gambling laws, orders Kalshi to keep operating Source: [https://arstechnica.com/tech-policy/2026/08/us-tries-to-override-new-york-gambling-laws-orders-kalshi-to-keep-operating/](https://arstechnica.com/tech-policy/2026/08/us-tries-to-override-new-york-gambling-laws-orders-kalshi-to-keep-operating/) James said that “no matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple\. By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process\.” ## Trump admin claims exclusive authority The CFTC says it alone has the power to regulate platforms such as Kalshi and Polymarket under the Commodity Exchange Act, a US law that gives the CFTC exclusive jurisdiction over designated contract markets \(DCMs\)\. “These are financial exchanges that offer financial instruments and operate across state lines,” Selig said yesterday\. “They match the bid from a resident of one state with the offer of a resident from another state and submit the trade to a clearinghouse that backstops the transactions of customers throughout the country\.” We contacted the New York governor’s and attorney general’s offices today and will update this article if they provide any comment on the CFTC action\. Kalshi previously asked a court to prevent New York from enforcing its gambling laws\. A federal judge[rejected Kalshi’s request](https://arstechnica.com/tech-policy/2026/07/new-york-can-restrict-sports-gambling-on-prediction-markets-us-judge-rules/)on July 7, saying that “Congress did not intend to preempt all state actions that may relate to DCMs\. Instead, the CEA leaves room for states to regulate tangential issues that may arise from trading swaps and other financial products on DCMs\.” Kalshi appealed that ruling to the US Court of Appeals for the 2nd Circuit\. Kalshi is also trying to get James’ lawsuit moved from a state court to a federal one\. New York is trying to keep its lawsuit in state court,[saying](https://storage.courtlistener.com/recap/gov.uscourts.nysd.669650/gov.uscourts.nysd.669650.17.0.pdf)that “New York has a strong interest in enforcing its police powers to regulate gambling” and that removing the lawsuit would disrupt the federal\-state balance conceived by Congress\. “Kalshi’s claimed federal interest is simply an overreach that would disrupt the federal\-state balance,” New York said\. “Kalshi seeks to shield itself from state regulation of gambling through an overbroad reading of federal law contrary to the intent of Congress\.” The New York fight is one of numerous legal battles in which the Trump administration and prediction markets are trying to block state regulation\. Minnesota, the first US state to pass a law prohibiting prediction markets entirely, was[prevented from enforcing](https://arstechnica.com/tech-policy/2026/07/judge-blocks-first-state-law-that-would-have-banned-prediction-markets/)the law by a federal court ruling last month\. The judge in the case said Minnesota’s total ban went too far but that US law may allow states to ban prediction\-market wagers that don’t meet the legal definition of swaps\.