CFTC Pulls New Mexico Into Prediction Markets Battle

New Mexico is the eighth state sued by the CFTC over prediction markets, as Gary Gensler doubted the regulators' claim of authority over sports event contracts. New Mexico is the latest US state to be pulled into the Commodity Futures Trading Commission’s legal fight for its jurisdiction over prediction markets after the state sued Kalshi for allegedly offering illegal sports betting. The CFTC on Friday that it sued New Mexico Governor Michelle Lujan Grisham, state Attorney General Raúl Torrez, and members of the New Mexico Gaming Control Board in federal court “to block the state’s efforts to apply state gaming laws against CFTC-registered contract markets.” New Mexico Kalshi on June 4, arguing the company is offering sports betting to residents without a license and that its sports event contracts function the same as traditional sports bets. The state also claimed Kalshi allowed those aged between 18 and 20 to use the platform, below New Mexico’s minimum gaming age of 21. New Mexico is the eighth state that the CFTC has sued after state authorities had taken enforcement action against prediction market platforms, with Rhode Island, Wisconsin, , , also facing lawsuits from the regulator. In its against New Mexico, the CFTC claimed that event contracts are “swaps” under federal commodities laws, and Kalshi is a Designated Contract Market (DCM) under the “exclusive jurisdiction” of the CFTC. “New Mexico’s attempt to prevent a CFTC-regulated DCM from offering CFTC-approved financial products intrudes on the exclusive federal scheme Congress designed to oversee United States commodity derivatives markets,” the CFTC argued. “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,” CFTC Chairman Mike Selig said in a statement. _Source:_ “The CFTC has the expertise and responsibility to protect its exclusive jurisdiction over commodity derivatives, and that’s exactly what we’ll continue to do,” he said. Source:_ “Sports bets are very rarely, if ever, about hedging,” Gensler argued.