CFTC Orders Kalshi to Keep Trading as New York Sues

The CFTC used its emergency powers on August 11 to order Kalshi to keep its exchange running, eleven days after New York sued the venue for $36 billion and moved to stop it offering event contracts. The order runs 10 pages and does not mention sweepstakes casinos once.

That last part is the part that matters to you, and we will come back to it. First, what actually happened.

What did the CFTC order say?

The Commodity Futures Trading Commission issued an order titled "Order Directing Kalshi to Continue Exercising DCM Functions," signed by Secretary Christopher J. Kirkpatrick and dated August 11, 2026. It directs Kalshi to "continue to perform its functions as an exchange in accordance with the CEA's Core Principles and its normal practices."

The trigger was New York. According to the order, Attorney General Letitia James filed a complaint against Kalshi at 12:01 a.m. on July 31, 2026 in the Supreme Court of the State of New York, alleging that the exchange's operations contravene New York gambling laws. Kalshi notified the Commission of a market emergency the next day.

The relief New York asked for is the striking part. It moved for a restraining order barring Kalshi from "operating a business that offers contracts relating to sports, culture, elections, and other events" both "within or from New York or to persons in New York." The CFTC's reading of that: "New York offers no limitation on, or definition of, 'other events,' which means that it seeks to prohibit Kalshi from offering all event contracts."

The damages number is larger than the company. The CFTC noted that too, pointing out that New York's own verified petition put Kalshi's publicly reported valuation at $22 billion.

What legal power is the CFTC using?

Section 8a(9) of the Commodity Exchange Act, codified at 7 U.S.C. 12a(9). It lets the Commission direct a registered entity to act whenever it "has reason to believe that an emergency exists," where an emergency includes a "major market disturbance which prevents the market from accurately reflecting the forces of supply and demand."

The Commission found that New York's lawsuit is exactly that. Its central objection is structural: "If New York's lawsuit, with the extreme relief it seeks, is permitted to continue, then a single State will effectively become the nationwide regulator of event-contract swaps on DCMs."

Chairman Michael S. Selig put it less carefully in the accompanying release: "New York intends to make event contract derivatives waste away under its iron curtain of state gaming laws before the courts get the chance to issue final rulings."

There is a catch buried on page four. An emergency order like this one is reviewable "only" in the federal court of appeals where the challenging party resides or has its principal place of business, or in the D.C. Circuit. So this is not the end of the argument. It is a federal agency putting its thumb on the scale while the argument continues.

This is also not the first time. The order's closing footnote cites its own precedent: an "Order Staying Emergency Rule Filed by KalshiEX LLC and Directing Kalshi to Fulfill Open Trades Involving Michigan Residents," dated July 14, 2026. Michigan restricts sweepstakes casinos on our matrix, and that order did nothing for them either.

Which states has the CFTC sued?

Nine, by its own count. The Commission says it has sued Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin to protect its jurisdiction, and has filed friend-of-the-court briefs in the Sixth and Ninth Circuits and the Supreme Judicial Court of Massachusetts.

None of that changes where sweepstakes play stands in any of them. Here is each state alongside its position on our own matrix, which tracks sweepstakes law rather than commodities law:

Five of the nine are states where the sweeps position is already settled against players, two by outright ban and three by restriction. The federal fight does not touch that either way. A CFTC jurisdictional claim covers derivatives on registered exchanges, not sweepstakes promotions.

Connecticut is the clearest illustration. A judge there denied Kalshi and Coinbase injunctions on August 10, holding that state gambling law survives a CFTC licence, and courts in Utah and Michigan reached the same result days earlier. Those were rulings about state gambling law. This is an instruction to a federal registrant. Both can stand at the same time.

Meanwhile the New York case is moving on its own track. The Attorney General removed nothing and wants nothing federal about it: she moved on August 7 to send the case back to state court, and the file was reassigned on August 10 to Judge Vernon S. Broderick after Judge Analisa Torres declined it as related to the earlier Kalshi matter. We read the docket on August 12.

Does any of this protect a sweepstakes casino?

No, and this is the honest answer rather than the convenient one.

The protection in this order attaches to one thing: being a designated contract market. Kalshi has held that designation since November 3, 2020. Everything the Commission did on August 11 flows from its authority over its own registrants, which is why the order is framed as a direction to a registered entity rather than a ruling about state law.

A sweepstakes casino operates under sweepstakes and promotions law. It holds no CFTC registration, so there is no federal agency with jurisdiction over it to issue an order like this one, and no exclusive-jurisdiction argument for it to make. If your brand goes dark in a banned state, no regulator is going to order it back on.

The distinction is worth holding onto because the two stories keep getting reported as one. Novig shows why they are not. It dropped its sweepstakes currencies entirely and obtained a federal designation before it could make this argument at all, and on the very same day this order issued, a federal judge refused it emergency relief against New York. One exchange got shielded by its regulator. The other got told to wait for briefing.

For where the sweeps model actually stands state by state, our legality matrix tracks operator documents rather than announcements, and what makes a sweepstakes casino legal covers the promotions-law basis the whole model rests on. If you are choosing where to play in a state that still permits it, start with our ranked list of tested casinos.

Sources & documents

• CFTC order directing Kalshi to continue exercising DCM functions, August 11, 2026 (10pp)
• CFTC press release 9281-26, "CFTC Exercises Emergency Authority to Ensure Market Stability," August 11, 2026
• CFTC press release index
• Docket, People of the State of New York v. KalshiEX LLC, No. 1:26-cv-06550 (S.D.N.Y.)

We downloaded and read the full order and the press release on August 12, 2026, and every quotation above is verbatim from one of them. The nine-state list and the amicus briefs come from the press release; the July 14, 2026 Michigan action is cited in the order's own closing footnote, not in the press release. The description of New York's complaint, the damages figure, the valuation figure and the reach of the proposed restraining order are all the CFTC's characterisations of New York's filings, made in a document where the Commission is an interested party, which is how they are attributed above. We confirmed the existence and July 31, 2026 filing date of the removed case independently on the federal court docket, but the state-court complaint itself was not readable to us today, so we have not checked New York's filings against the CFTC's account of them. The August 7 remand motion and the August 10 reassignment to Judge Broderick come from that docket, which we read on August 12. Kalshi was not asked for comment and none is quoted.

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