The U.S. Commodity Futures Trading Commission (CFTC) has directed Kalshi prediction market to ignore state court orders and continue operations as per federal rules. This comes amid a Washington court’s cease ruling to stop the company from offering most of its event contracts.
CFTC Files Emergency Order in Court as Kalshi Faces Ban in Washington
CFTC Office of the General Counsel sent a letter to SDNY Judge Lorna Schofield about the supplemental authority. The regulator’s emergency order compels Kalshi to disobey state court orders as “supplemental authority” in the agency’s SDNY lawsuit vs. New York.
This comes after the CFTC exercised its emergency authority under the Commodity Exchange Act (CEA) and ordered Kalshi to continue operating to ensure market stability. Also, the prediction market will operate normally even if New York wins a pending restraining order to halt event contracts offering.
Kalshi followed with a pre-motion letter in KalshiEX LLC v. Williams asking the SDNY court to delay all actions until the pending decision on Kalshi’s appeal in the 2nd Circuit Court of Appeals. It claimed defendants do not object to a stay of discovery pending resolution of the motion.
Sports betting and lawyer Daniel Wallach claimed it’s an opportunity for New York AG to challenge false narrative. In the filing, they can argue “unclean hands” and even seek a temporary restraining order (TRO) or preliminary injunction (PI) against the CFTC.
Judge Ruled Against Prediction Market in Washington
King County Superior Court Judge John McHale issued an order implementing a preliminary injunction against Kalshi. Washington court ruling requires the platform to stop event contracts on sports, elections, politics, entertainment, culture, technology, science & mentions in the state.
The firm is also needed to implement IP address and residency-based geofencing by August 19 and multi-source geofencing by September 2. Meanwhile, events contracts tied to commodities, climate, economics, and finance may continue.
Washington Attorney General Nick Brown hailed the decision, stating: “Kalshi has gotten rich promoting wagers on sports, elections, natural disasters, events related to the Iran War, and more.” He added that “We will continue to enforce Washington law and hold Kalshi accountable for misleading consumers.”
Kalshi’s motion to stay the Washington preliminary injunction order pending appeal was denied by the court. Wallach claimed it will now pursue similar stay relief from the Washington Court of Appeals.
Meanwhile, the New York City (NYC) Council launched a probe into alleged deceptive advertising practices of Coinbase, Kalshi, Polymarket, and Gemini. The council signaled that the probe will largely focus on Polymarket.
To navigate the volatile shifts in event contract pricing resulting from these court decisions, traders often leverage advanced prediction market tools to monitor live odds and data feeds.
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