CFTC Sues New Mexico — Eighth State in the Federal Preemption Fight, and the First Filed After the Proposed Rule Dropped
The CFTC sued New Mexico on 12 June 2026 to block the state from enforcing its gambling laws against prediction markets, days after AG Raúl Torrez sued Kalshi for offering unlicensed online sports betting. New Mexico is the eighth state the agency has sued. The complaint is the first to land after the CFTC's own proposed rule was released this week — a rule that explicitly supports most sports-related event contracts.
The Commodity Futures Trading Commission sued New Mexico on Friday, 12 June 2026, asking a federal court to stop state officials from enforcing local gambling laws against federally regulated prediction markets. The suit answers a complaint filed days earlier by New Mexico Attorney General Raúl Torrez, who alleges Kalshi is illegally offering online sports betting in the state through the trading of its sports event contracts. With this filing the CFTC has now sued eight states — joining Arizona, Minnesota, Wisconsin, New York, Connecticut, Illinois, and Rhode Island — in a coordinated federal campaign to defend what it calls exclusive jurisdiction over commodity derivatives.
Chairman Michael Selig's language has hardened with each successive filing. "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," he said. The complaint leans on the wins already banked, citing the federal courts that have "swiftly responded by issuing temporary restraining orders and preliminary injunctions" against states — a direct reference to the Arizona preliminary injunction from Judge Liburdi on 5 May, the template every subsequent CFTC filing now cites as persuasive authority.
New Mexico's legal posture has a specific local wrinkle that makes it more than a copy of the other seven cases. The state permits sports betting only at brick-and-mortar tribal casinos operating under tribal-state gaming compacts; there is no statewide mobile sports-betting framework at all. Torrez framed the case around that structure, saying the only lawful gaming in New Mexico operates under tribal compacts or strict state licensing, and that "Kalshi has ignored that framework entirely." The tribal-compact angle introduces sovereignty and exclusivity interests the other state cases do not feature, and could draw tribal gaming operators into the fight as interested parties.
The timing against the CFTC's own rulemaking is the part worth watching. The agency released its proposed prediction-market rules this week — under White House review since late May — and the proposal signals the CFTC is supportive of most sports-related event contracts. The agency is no longer arguing pure statutory preemption in a regulatory vacuum; it is arguing preemption backed by an articulated federal regime that expressly permits the very sports contracts states are trying to ban. Operators have won nearly every one of these fights so far, with Nevada the lone exception. New Mexico becomes the eighth data point in a campaign running heavily in the federal government's favour at trial-court level. Our litigation scoreboard tracks all eight cases.
Operators mentioned in this article
Recent updates
Utah Files Felony Charges Against Kalshi and Its Founders — Second State to Criminally Charge a Platform
Utah filed criminal charges against Kalshi and its two co-founders, Tarek Mansour and Luana Lopes Lara, on October 28 — 13 felonies and a misdemeanour, including a second-degree 'pattern of unlawful criminal activity' count and 12 counts of online gambling promotion. The charges stem from a September sting in which an undercover agent placed 12 sports wagers verified to be in Utah. The CFTC sued Utah the day before to block state enforcement, its tenth such suit. Utah is the second state after Arizona to criminally charge Kalshi, and the first to charge the founders personally. Kalshi called it a 'crazy overreach.'
NBA Names Kalshi and Polymarket Preferred Exchanges — Leaving the NFL Alone in Opposition
The NBA announced on October 26 that it has named Kalshi and Polymarket its 'preferred prediction market exchanges,' signed a non-binding memorandum of understanding with the CFTC on basketball integrity, and expanded its DraftKings deal to include prediction markets — the first league to extend a sportsbook partnership into the category. The exchange deals bar league and team personnel from trading NBA contracts, limit permissible markets, and require sharing suspicious-trading data, in exchange for NBA intellectual property and official data. The NBA joins MLB, the NHL, and MLS as partnered leagues, leaving the NFL as the lone major holdout — and the only league fighting the platforms in court.
CFTC Chair Says Agency Is Watching Prediction Markets for Manipulation Ahead of Midterms
CFTC Chairman Michael Selig said on October 23 that the agency is closely monitoring prediction markets for manipulation ahead of the November 3 midterms, and that it is separately scrutinising oil market trading tied to President Trump's announcements about the war in Iran. Combined midterm open interest on Kalshi and Polymarket stood at $250 million as of October 18, with Kalshi holding 84%. Selig acknowledged the agency often catches political figures trading 'oftentimes after the fact.' The remarks highlight the CFTC's dual role as both the platforms' federal protector and their manipulation watchdog.