Gaming Attorneys Accuse CFTC of Unprecedented Contempt for Court Orders Directing Kalshi Operations
TL;DR — Attorneys criticized the CFTC for twice ordering Kalshi to ignore court rulings in Michigan and New York, including a $36bn lawsuit. The agency has engaged across seven states amid roughly 80 cases. Panelists expect ultimate resolution at the Supreme Court.
SCCG Take — The CFTC’s emergency orders expose clear federal-state jurisdictional friction that favors operators in the short term but invites higher-court limits on agency reach.
Gaming attorneys have criticized the Commodity Futures Trading Commission for directing prediction market platform Kalshi to defy multiple court orders, calling the moves blatant and unprecedented.
As reported by SBC Americas, the remarks came during the Indian Gaming Association’s ‘The New Normal’ webcast. Twice in the last six weeks the CFTC invoked emergency authority. On July 14 it ordered Kalshi to fulfill open trades in Michigan despite a court mandate to geoblock the state and void certain sports trades. On Aug. 11 the agency directed continued operations in New York even after the state ordered a stop and Attorney General Letitia James filed a $36bn lawsuit.
Attorneys Decry CFTC’s Blatant Disregard
Jason Giles, IGA Executive Director, questioned the regulator’s notices telling prediction markets to defy court orders. Joseph Webster, managing partner at Hobbs, Straus, Dean & Walker, LLP, stated: “The CFTC has put out these orders and notices suggesting that even if a court decision directs a company to stop taking these particular contracts, they’re required to continue to do so anyway. I will say I’ve never seen anything like that.”
Scott Crowell of Crowell Law Office Tribal Advocacy Group added: “When you already have a federal court saying ‘Kalshi, you do not have permission to continue to operate outside of the parameters of New York law’, that literally is a federal agency telling a regulated entity to defy a federal court order. In my 50 years of being a lawyer, I’ve never seen blatant contemptuous disregard by a federal agency. That’s new.”
The CFTC has intervened in litigation in Arizona, Connecticut, Illinois, Kentucky, Minnesota, New York and Wisconsin. Webster described “an incredible 18 months or so of litigation” with “something like 80 cases or so of various types in both federal court, state court.” Crowell said the agency was acting as a cheerleader for prediction market operators while manufacturing regulatory infrastructure.
Path to Supreme Court Decision
Panelists agreed the core issues will be resolved by the Supreme Court. Webster expects New Jersey to file a petition for writ of certiorari by Sept. 3 after a 2-1 opinion against the state in the U.S. Court of Appeals for the Third Circuit. He cited a “sea change” in recent court results and a decent chance of a circuit split, one factor that often prompts review. “I think it certainly seems like the trend has turned pretty significantly in favor of states and tribes and against the prediction markets,” Webster said.
Oral arguments in other circuits, including the Sixth Circuit, have not yet produced opinions but appear to reflect shifting momentum.
Reporting: SBC Americas
Generated by SCCG’s automated editorial system from published source reporting. SCCG Management holds editorial responsibility.
Federal agency overreach is handing operators short-term wins but guaranteeing a Supreme Court collision and long-term regulatory chaos.
We've tracked prediction markets since day one, and this is the sharpest federal-state clash we've seen. When a regulator tells licensees to ignore court orders, the entire compliance framework fractures. Operators need state-by-state clarity, and partners across seven states are caught in the crossfire until SCOTUS steps in.
- CFTC issued emergency orders directing Kalshi to ignore Michigan and New York court rulings, including a $36bn lawsuit
- Attorneys with 50+ years' experience say they've never seen a federal agency display such blatant contempt for court orders
- Agency now involved in roughly 80 cases across seven states; panelists expect Supreme Court resolution
SCCG angle: SCCG connects operators to tribal advocates, state regulatory advisors, and federal affairs counsel who can map exposure state by state and architect defensible structures while this plays out. We've placed compliance chiefs in multi-jurisdictional fights before—this one demands preemptive strategy, not wait-and-see.
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