On August 31, New York Deputy Attorney General Katherine Rhodes Janofsky filed a letter with the US District Court for the Southern District of New York asking Judge Lorna Schofield to give “no weight” to a Commodity Futures Trading Commission emergency order that has kept Kalshi operating in the state, describing the order as “irrelevant” and lacking “persuasive or evidentiary value.”
The CFTC’s press release announcing the order shows the Commission invoked its emergency authority on August 11 — its second such move in the dispute, following a July order tied to Kalshi’s Michigan operations — days after New York Attorney General Letitia James filed a $36 billion state court lawsuit accusing Kalshi of running an illegal gambling operation. CFTC Chairman Michael Selig said in the order that New York was attempting to use state gaming laws to eliminate event-contract derivatives before courts could rule on the matter, adding that “Congress did not intend for derivatives exchanges” to face a fragmented, state-by-state regulatory framework.
New York Disputes the Emergency Rationale
Janofsky’s letter characterized the CFTC’s stated market emergency as implausible, arguing that the inability to offer unlicensed sports wagers does not constitute a threat to market stability. The letter also argued the order does not reflect independent expert judgment, noting that multiple federal courts have already rejected the CFTC’s position that Kalshi’s sports event contracts qualify as swaps under the Commodity Exchange Act or that state gaming law is preempted by federal authority.
New York further noted that Kalshi had notice of the state’s legal position since a New York State Gaming Commission cease-and-desist order issued October 24, 2025, and argued Kalshi “knowingly chose to continue and expand” its sports contract offerings in the state despite that warning.
A Related Ninth Circuit Precedent
On August 28, the US Court of Appeals for the Ninth Circuit ruled 3-0 that Nevada may regulate Kalshi’s sports event contracts as gambling, rejecting arguments that the contracts are swaps subject to exclusive federal jurisdiction. New York’s letter cited the decision as further undermining the CFTC’s legal position in the New York case.
Part of an Escalating Multistate Fight
The filing is the latest development in a broader confrontation between the CFTC and state regulators over Kalshi’s sports-related event contracts. New Jersey has separately petitioned the US Supreme Court for a definitive ruling on whether such contracts fall under state gaming law or federal commodities jurisdiction, and Michigan’s Ingham County Circuit Court signed a preliminary injunction on September 1 barring Kalshi’s sports contracts statewide, with fines of $500,000 per day for noncompliance.
Kalshi had not filed a public response to New York’s letter as of publication. The case remains before Judge Schofield in the Southern District of New York.