'Lawlessness': Trump Agency Instructs Prediction Market Giant Kalshi to Defy Federal Court Order

Consumer advocacy groups are accusing the Trump administration of engaging in "lawlessness on behalf of well-connected gambling interests" after the Commodity Futures Trading Commission instructed the prediction market giant Kalshi to continue operating in New York, in defiance of a federal court order.

In a Tuesday statement, the CFTC said it "exercised its emergency authority" and "ordered" Kalshi to "continue to operate in accordance with the Commodity Exchange Act’s Core Principles." The statement came weeks after a federal judge denied Kalshi's bid to prevent New York from enforcing its gambling laws against the platform, which allows users to "trade on the outcome of real-world events." The CFTC's action also came after New York sued Kalshi for allegedly "running an illegal gambling operation."

Benjamin Schiffrin, director of securities policy for the advocacy group Better Markets, said in a statement that it appears the CFTC "believes that the law does not apply to it."

"Now that New York has sued Kalshi to prevent it from circumventing state gambling laws, the CFTC has directed Kalshi to continue to operate even if a court enjoins it from doing so," said Schiffrin. "This is not the first time the CFTC has directed Kalshi to violate a court order. It did so after a Michigan state court ordered Kalshi to void, cancel, and refund some bets. The CFTC is now directing Kalshi to violate the orders of a federal court. Its cheerleading for prediction markets truly knows no bounds."

New York's lawsuit, filed late last month, seeks a court order stopping Kalshi from "operating as an unlicensed gambling business and requiring the company to pay fines, forfeit all illegal gains, and pay restitution to users."

The CFTC, headed by Trump-appointed Chairman Michael Selig, has launched a sweeping effort to prevent states from regulating prediction markets, arguing the federal agency has sole regulatory authority over the platforms. States have pushed back, accusing the CFTC of exceeding its powers.

In a statement on Wednesday, Public Citizen's Tyson Slocum called the CFTC's intervention on behalf of Kalshi in New York "a massive overreach."

“After the federal court rejected gambling platform Kalshi’s request to continue offering gambling products to New Yorkers while the state challenged their legality, the CFTC has swooped in, declaring a phony emergency, and issued an order allowing Kalshi to defy federal courts and a US state," said Slocum. "The Commodity Exchange Act should not permit such gambling platforms, and until there is reasonable and lawful regulation at the federal level, states should be the ones—not the CFTC—making the decisions on how to regulate gambling.”