CFTC Sues New Mexico as Sports Prediction Market Dispute Widens
Summary
- The US CFTC said it has sued New Mexico in a dispute over regulatory authority for sports prediction markets.
- The CFTC said prediction contracts based on sports outcomes are derivatives governed by the federal Commodity Exchange Act, with oversight authority vested exclusively in the federal government and the CFTC.
- The CFTC has recently filed similar lawsuits against Wisconsin, Illinois, Arizona, Connecticut and New York, as the federal-state dispute over prediction market regulation widens.
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The US Commodity Futures Trading Commission has sued New Mexico in the latest dispute over who has authority to regulate sports prediction markets.
The Block reported on June 12 that the CFTC filed a lawsuit in federal court in New Mexico against state officials including Governor Michelle Lujan Grisham and Attorney General Raúl Torrez. The agency is seeking to stop the state from applying its gambling laws to sports prediction platform Kalshi.
New Mexico had moved against Kalshi, alleging that it offered sports betting services without a state license and allowed users younger than the legal gambling age of 21 to participate. Torrez has said legal gambling in New Mexico can operate only under tribal compacts or the state's regulatory framework.
The CFTC argues that prediction contracts based on sports outcomes are derivatives governed by the federal Commodity Exchange Act. It says oversight authority is vested exclusively in the federal government and the CFTC.
CFTC Commissioner Caroline D. Pham said New Mexico was trying to apply state gambling laws to a federally regulated derivatives exchange. The effort runs counter to decades of legal precedent and statutory structure, she added.
The CFTC has filed similar lawsuits in recent months against Wisconsin, Illinois, Arizona, Connecticut and New York.
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