The Legal War Over Prediction Markets Is Getting Crazier

In addition to lawsuits like the one in Minnesota earlier this year, the agency can intervene on behalf of prediction markets is by invoking Section 8a(9) of the Commodity Exchange Act. That provision, which was designed to address a “market emergency,” allows the CFTC to “direct” a commodity or derivatives market to “take such action as in the Commission’s judgment is necessary to maintain or restore orderly trading in or liquidation of any futures contract.” This power is rarely invoked, with only four previous instances between the years of 1976 and 1980.

After laying moribund for the last 46 years, the CFTC has invoked those powers three times in 2026 to direct prediction markets to ignore state regulators and even the courts. Earlier this month, it issued an order instructing Kalshi to continue normal operations in New York—that is, to keep offering sports-betting products on its markets—despite the legal actions taken by New York gambling regulators.

“If New York can ban event contracts, it logically could ban any derivatives product that the Commission regulates, including basic futures contracts, on the erroneous basis that trading in these products contravenes New York’s gambling laws,” the agency claimed. “In that case, New York would wield existential control over every entity that offers derivatives products and is headquartered in New York—the financial capital of the world.”