The CFTC has ordered prediction-market platform Kalshi to remain operational, declaring New York’s shutdown attempt a market emergency. The Tuesday directive invokes Section 8a(9) of the Commodity Exchange Act, which allows emergency intervention when disruptions prevent proper price formation. New York filed suit on July 31 claiming Kalshi operates an illegal gambling operation and is seeking at least $36 billion in damages plus a temporary restraining order covering all event contracts. CFTC Chairman Michael Selig pushed back hard, arguing Congress never intended derivatives exchanges to face fragmented state gaming regulations. The regulator warned that forced closure could trigger disorderly liquidation of open positions, push trading to competing venues, and leave traders with unhedged exposures across broader strategies. Kalshi, a CFTC-designated contract market since November 2020, notified the Commission that the requested restraining order would prevent it from meeting eight statutory core principles. Attorney General Letitia James maintains the platform’s products constitute gambling regardless of federal designation.
FXnCO Insight
Traders using Kalshi contracts for hedging should monitor appeals court developments closely, as emergency orders under this provision bypass standard review channels.
Source: Finance Magnates