EDIT: see DannyBee's comment below ( https://news.ycombinator.com/item?id=49266746 ). It does look like the CFTC has extrapolated the "nationwide" out of either some novel interpretation of the filing or just entirely fabricated it as their justification for their action.
I've got no love for Kalshi, but "orders Kalshi to continue operate in New York" doesn't seem to be present anywhere in the actual release.
The article presents the sequence of events as:
1. The State of NY files a lawsuit against Kalshi under the theory that it can be regulated by state gambling laws.
2. The State of NY files for a temporary restraining order requiring Kalshi to halt trading nationally, not just in NY.
3. Kalshi reaches out to the CFTC to claim that NY doesn't have the authority to regulate interstate commerce.
4. The CFTC agrees and uses their authority to override the TRO.
That seems pretty aligned with how interstate commerce is regulated and managed in the US.
I think it's good to have the official context from the state of NY as well, which argues that Kalshi meets the state's standards for gambling; has serially refused to get the required licenses, and serves customers aged 18-20 in a market where gambling is restricted by law to people over 21.
My impression was that NY wanted a TRO to stop Kalshi operating in New York, not nationally. A TRO seems like a rather extreme measure in that it assumes the plaintiffs win the lawsuit as a premise, but I guess that's partly a function of how long New York has been trying and failing to obtain compliance with its gaming laws, and intended to provoke a preliminary hearing into the merits of the case (vs letting the litigation drag on for years without anyhting changing).
NY let DraftKings plaster Penn station and subway fare gates with ads before sports betting was legal there. They never sought an injunction to shut down those operations outside NY.
> 2. The State of NY files for a temporary restraining order requiring Kalshi to halt trading nationally, not just in NY.
The State of New York did *NOT* file a temporary restraining order, neither in NY or nationally. Please find a citation of that if you want to claim it is true.
Rather the State of New York filed suit here to stop operations in New York:
"Permanently enjoining Respondent and its principals, agents, and employees from
operating an unlawful gambling business, or otherwise advancing gambling activity, or
profiting from gambling activity, within or from New York or to persons in New York,
without being licensed by the New York State Gaming Commission"
That claim is coming directly from the CFTC, it is not this user's novel claim.
It seems that overall the CFTC and the NYAG are presenting materially different event time lines, so as an outsider it's a bit unclear what is actually happening.
The online gambling industry put their guy in charge of the CFTC (Michael Selig).
Their main goal is to preempt all state regulation of their gambling platforms. To that end Selig is promoting the novel theory that sports betting is trading of commodities and therefore should be "regulated" solely by his agency.
But that one seems be about halting trading in NY, not nationally:
> preliminarily and permanently enjoining Respondent and its principals, agents, and
employees from:
> a. operating an unlawful gambling business, or otherwise advancing gambling
activity or profiting from gambling activity, within or from New York or to
persons in New York, [...]
So this claim from GP still looks incorrect:
> 2. The State of NY files for a temporary restraining order requiring Kalshi to halt trading nationally, not just in NY.
It seems that New York is asking the court for a temporary restraining order that would prohibit Kalshi from offering all event contracts nationwide. I also have zero love for Kalshi, but I can see why such a request would be concerning, regardless of whether I think Kalshi is a degenerate trash heap.
In saying, "New York seeks a temporary restraining order prohibiting KalshiEX, LLC from offering all event contracts nationwide" the CFTC's press release substantially misrepresents the filing by the NY AG. On page 29, the filing requests "Permanently enjoining Respondent and its principals, agents, and employees from operating an unlawful gambling business, or otherwise advancing gambling activity, or profiting from gambling activity, within or from New York or to persons in New York, without being licensed by the New York State Gaming Commission" (https://ag.ny.gov/sites/default/files/court-filings/new-york...).
Since Kalshi's HQ is in NY, I guess the most charitable interpretation is that perhaps the CFTC's statement is based on the assumption granting the TRO would have the net effect of disrupting Kalshi's operations everywhere until they can serve the site from outside NY. Of course, without disclosing that extrapolation, the statement is still factually incorrect.
Setting aside that significant error, I suspect this CFTC order is an attempt to create a federal vs state conflict in the hope the judge will suspend or defer any TRO until that issue is decided. I imagine Kalshi will file a response tomorrow arguing exactly that. Ultimately, this will still come down to whether Kalshi can be regulated by states, and if so, whether it's gambling.
Take out some of the "or"s that obscure it and you get "or otherwise advancing gambling activity from New York, without being licensed by the New York State Gaming Commission". Seems very straightforward to me.
When Texas shut down porn sites internationally, this didn't happen, the order from Texas was allowed to stand. This is because Texas is a red state and NY is blue.
That's not true at all. New York is asking the court to stop the Kalshi executives, who are located in New York, from flagrantly violating the sports gambling laws of New York. Kalshi would be free to move to another state where sports gambling is legal if they wanted to keep the platform up.
But federal law preempts state law, and the federal regulator, the CFTC, has now decided that prediction market contracts are indeed swaps if you think about it, and thus under their regulation. If you believe the latter, then New York has no business trying to separately regulate Kalshi as a sports book.
I do not believe the latter. The attorneys general of nearly every state in the US have signed onto a letter explaining in detail (https://oag.maryland.gov/News/Documents/pdfs/2026-4-30%20CFT...) why the sports-related contracts sold on prediction markets are not swaps nor otherwise subject to CFTC regulation. This isn't a close or debatable question, it's not even a partisan one, and the only reason why a controversy exists is that Kalshi and Polymarket have gotten Americans hooked while bribing key government officials to clear the way.
I can't read your link (it 403s), but there's no fundamental line separating things that are clearly financial instruments but are nonetheless cash-settled derivatives on binary propositions (e.g. credit default swaps), ones that are clearly not financial but also not sports gambling (weather/political prediction markets) and things that are pretty obviously sports gambling (most of Kalshi). The form of these are all identical and so ought to be regulated identically.
I also don't see why _sports_ betting is so especially bad - even if New York were successful here, Kalshi would still be able to offer it's degenerate gamblers all sorts of stupid bets in culture, politics, weather, etc. When I grew up, the only thing you could bet on was horses and dogs... so the gamblers were really into form guides and horses. If the only thing they could gamble on was politics and news markets, they would just obsess over that instead.
What's bad about sports gambling is that it doesn't follow the model you're describing. The AGs point towards a study (https://perma.cc/4SF5-VGZH) which finds that legalizing sports betting does not just reallocate money that was going to go to gambling anyway. Instead it crowds out savings. There are people who will explicitly tell pollsters and journalists (see e.g. https://www.bloomberg.com/news/articles/2026-08-12/gen-z-inv... from yesterday) that they engage in sports betting because they see it as a fun alternative to traditional investments.
The NV link doesn't work either. I suspect geoblocking.
That study is measuring the effect of the introduction of _any_ modern online betting to these jurisdictions; before it was legalised there was no equivalent other than going to a casino or racetrack. But that genie can't be put back in the bottle just by restricting sports betting to sports books, as NY is asking for, now that all sorts of other prop bets are available as substitutes (and also sports betting on state-licensed sites). IMO regulators should focus on forcing the market makers to offer tighter spreads so prediction markets (and options etc.) are less negative-expectation for retail punters.
…And growing wheat on your own land to feed your own cattle somehow counts as interstate commerce, despite no commerce taking place and the wheat never leaving your property, let alone the state. (Wickard v. Filburn)
Wickard was growing wheat for interstate commerce. The case was about whether the additional wheat he grew for "personal" use was also part of interstate commerce.
It was a creative ruling in multiple senses of the word. They invented the idea from whole cloth and it effectively created new laws from the bench.
> The Court decided that Filburn's wheat-growing activities reduced the amount of wheat he would buy for animal feed on the open market, which is traded nationally, is thus interstate, and is therefore within the scope of the Commerce Clause. Although Filburn's relatively small amount of production of more wheat than he was allotted would not affect interstate commerce itself, the cumulative actions of thousands of other farmers like Filburn would become substantial. Therefore, the Court decided that the federal government could regulate Filburn's production.
There were similar issues dating back to the founding of the country. However nobody pays those any heed because it destroys the ideological claims they're trying to make.
Just around, or slightly around the level of testing that Roe vs Wade prior to Dobbs. Or a bakers dozen of other established precedents that were "one of the more tested legal concepts" until ... recently.
Generally speaking, no: there’s a significant difference in precedent between the two. IANAL, but interstate commerce is explicitly written into the Constitution as the jurisdiction of the federal government and was tested (and generally serially expanded) in court multiple times long before Roe.
Birthright citizenship is explicitly written into the Constitution, yet about a month ago, 2 SCOTUS justices provided opinions and votes suggesting that this detail doesn't matter much.
Unfortunately for Roe v Wade, abortion and a right to privacy aren't explicitly laid out in the Constitution. Interstate commerce is. New York would be entirely in their right to ban Kalshi in New York but not halt operations nationwide.
It sounds like it's more, New York wants to halt Kalshi's New york operation, however Kalshi is headquartered in New York, so this would stop all of Kalshi's operations.]
If New York has this jurisdiction(management of for profit incorporation's in New York) Kalshi would have to reorganize somewhere else to continue operations.
Not literally. I think the text in question is: "within or from New York or to persons in New York." Where CFTC is arguing that "from" would have interstate consequences. I'm not a legal expert, though, so I have no idea if something similar has been fought in court before.
edit
Interesting, I found KalshiEX LLC v. Flaherty [1] which seems strikingly similar to this case and was ruled in favor of Kalshi.
"The Third Circuit affirmed the District Court’s order. The appellate court held that the Commodity Exchange Act (CEA) grants the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over swaps, including sports-related event contracts traded on CFTC-licensed DCMs."
These are the CFTC licensed contract markets, which are not the same exact thing.
I'm not sure how to explain all this without writing a 70 page dissertation on HN, and it's probably not worth it :)
Overall - this is a wildly complicated area. To give you an idea how complicated: Ignoring state law, transmitting gambling information for sports events over the wire is a federal crime. See 18 U.S.C. § 1084(a), which makes it a crime for a person “engaged in the business of betting or wagering” knowingly to use an interstate or foreign wire facility to transmit bets/wagers or information assisting bets/wagers “on any sporting event or contest.”
(It's legal if you are transmitting from a jurisdiction where it's legal to a jurisdiction where it's legal).
This has been upheld repeatedly for sporting events.
New york can, and did, include a claim to enjoing them from violating this act, which has absolutely no pre-emption issue because it's not a state law.
The case you cited is going to end up in the supreme court, where it will be a toss up.
(in previous supreme courts, it would be a non-starter and the third circuit would have been summarily reversed)
I don't think you're disputing that the requested order would halt Kalshi's operations nationwide for as long as Kalshi remained headquartered in NYC though? The CFTC's framing is disingenuous, presumably because they wanted to create a false impression that NY was attempting to regulate activity without any nexus in that state, but that's still the practical effect given Kalshi's current location.
The most important lines to me are the CFTC Chairman's quote:
> These are financial exchanges that offer financial instruments and operate across state lines. They match the bid from a resident of one state with the offer of a resident from another state and submit the trade to a clearinghouse that backstops the transactions of customers throughout the country. New York has no business regulating these interstate financial markets.
If true, it seems quite irrelevant that NY is limiting its suit to NY customers. NY would be restricting trade to people in other states. (I am not a fan or user of Kalshi)
Isn't this how gambling works though? You and I place a similar value of chips on a table, then the winner walks it over to a third party (the counter at the casino) to exchange the chips for currency?
It's a relatively uncommon structure for gambling, and things that do work that way (like casual sports bets between friends) are often exempt from local gambling laws. Traditional sports betting was done directly between a gambler and their sportsbook of choice at whatever profit-maximizing odds the bookie chose.
In other parts of the world, betting exchanges like BetFair operate this way, but unlike Kalshi, there's no pretence that what's occurring is anything other than gambling, and they are heavily regulated like other sports betting operators.
In Australia, where legal online sports betting is everywhere, it's hugely unpopular with everyone except the bookmakers, TV networks (for whom betting ads during sports broadcasts are the one remaining decent revenue stream), a relatively small group of gamblers (many of whom gamble enough for it to pose serious problems for them and their families), and the nominally socially-democratic politicians running the federal government (who were more than happy to ban social media for teens despite the evidence being ambiguous at best, but are amazingly reluctant to tackle this, despite the demonstrated harm).
Put the genie back in the bottle and ban online sports betting. If somebody wants to place a bet on sport, make them physically go to a betting shop or the racetrack.
It would be trivial though to do the same thing for sports. Create the market, contracts on either side....
How is Kalshi paid today? They take a cut of each transaction, just like the bookmaker does. Neither cares who wins or loses
Turning it around, the bookmaker really isnt who you bet against, I get that technically you do. but in practice.... You bet against all the other bettors. Bookmakers offset bets with other bookmakers, etc if the balance is off.
In practice bookmakers arent trying to be on one side or the other in a bet. Some do, but they dont last long. They want the odds to make a 50/50 market in bets and they pocket the vig.
Oversimplified but that is the gist of it. Also, my knowledge of bookmaking is from my neighborhood and I assume the legal variety works the same way though.
That’s pretty normal though, and has been for ages. A lot of states have random laws around the things you can sell there, even though it would prevent an out of state entity from selling the product there.
Liquor laws come to mind, you usually need special distribution stuff per state.
It would be a wild expansion of the commerce clause to prevent states from regulating what can be sold inside the state.
I think the point of confusion or obfuscation is that Kalshi is headquartered in NYC, so an order prohibiting them from offering bets/contracts "within or from New York" has the effect of prohibiting them nationwide. They could move to a friendlier state, but they presumably would rather not.
You are correct, but New York also apparently sees their jurisdiction as nationwide when the thing being wagered on has some proximity to the state. If you read the petition, it has language like this:
> New York also prohibits sports wagering on events in which New York college teams participate
Ultimately, this suit is about protecting state gambling taxes and incumbent casinos. I guess I don't feel a particular love for either side.
> In the lawsuit, filed on July 31, New York seeks a temporary restraining order prohibiting KalshiEX, LLC from offering all event contracts nationwide and more than $36 billion in damages.
If you go to page 29 you'll see what they requested.
The claim they are trying to prevent them from offering all event contracts nationwide is simply false. The closest anywhere is a claim to enjoin them from violating some federal criminal statutes that they would not be violating if they were not operating in new york illegally (IE do not stop them from operating nationwide).
You can also see their is no specific number on the damages. In fact, the only specific number is the request for Kalshi to pay $2000 in costs to the state of NY.
The CFTC is, understandably, relying on people not bothering to read it and so has put out an "alternate set of facts".
Edited my earlier comment to point here. Is your assessment that CFTC is pulling the broader impact fully out of the air, or are likely to try to spin the coverage of events in New York for participants outside of New York as counting as interstate commerce?
The "emergency powers" they speak of are 7 U.S.C. § 12a(9), and they are quite specific.
It gives them the authority to direct a registered entity to do a few specific things. None of those things are relevant to here. It's stuff like emergency margin requirements, position limits, etc. Not "violate state law". It gives them no power to enable a registered entity to violate a TRO, or anything like that. Such a power would have to come through pre-emption.
The CEA gives them zero authority to preempt state law directly, and any pre-emption would have to be argued to already have occurred under the Commodity Exchange Act. They'll argue it occurs because of their order, but it actually doesn't meet the requirements to do that, so then they'll argue the CEA preempts state law.
As you may imagine, this has been argued about before, for a very very very long time.
Gambling is core state police power, and has been found so many times. As such, presumptions against pre-emption would apply, etc. Even in the current court that ignores precedent, using an esoteric made-for-specific-situations emergency power statute like this one would to preempt new york/etc (this is not the only case) law would run clearly afoul of the so-called major questions doctrine.
Lastly, the current CEA regulations actually ban event contracts that are unlawful under state law (17 CFR 40.11):
Prohibition. A registered entity shall not list for trading or accept for clearing on or through the registered entity any of the following:
...
1. (1) An agreement, contract, transaction, or swap ... that involves, relates to, or references terrorism, assassination, war, gaming, or an activity that is unlawful under any State or Federal law;
So trying to pre-empt state law when the existing regulations clearly don't allow event contracts that are disallowed under state law is ... not likely to succeed.
Also note that New York has claimed a violation of the wire act in there, and in particular 18 U.S.C. § 1084(a). This is a federal statute that makes it illegal to transmit sports betting information over the wire (it's okay if it's from a jurisdiction where it's legal to a jurisdiction where it's legal). They have asked the court to enjoin them from violating this. This claim is here because it avoids all the pre-emption issues - it's a federal statute. So New York is also hedging their bets on the state preemption issue.
All that said, there is also a CFTC-designated contract market that Kalshi operates, and that they could likely exercise significantly more power over, and New York can order them around less on. But that is likely to end up in the supreme court, and harder to predict. Any other court the answer would be clear - congress doesn't have the authority to regulate purely intra-state gambling, etc.
That says contracts about activities which are unlawful under State law, not contracts which are unlawful. Sports is legal, even if sports betting is regulated
Wanted to thank you for the highly informative breakdown, especially given we got here by me making the mistake of not pulling up the underlying complaint before commenting.
One thing you could perhaps shed some light on - if a TRO were to be requested (it seems none has been?) that would be similar to the permanent order that NY requested, would it have the effect of shutting down Kalshi nationwide unless and until they move their operations to a different state? Would this conceivably bring it legitimately under the jurisdiction of the CFTC?
Note that I am not in any way a fan of Kalshi and similar services, and I personally believe they are simply gambling services. Just curious what the law might say for now.
The complaint says "within or from New York or to persons in New York". But Kalshi is headquartered in Manhattan, right? So how can they continue to offer all event contracts nationwide without operating 'within or from New York'? Would they have to immediately move their HQ and fire all New York based employees?
As far as I can read it, no such attempt has been made. New York is saying certain things are illegal in New York. It seems New York is not attempting to have any say over what Kalshi does outside of New York, when it does not involve New York residents.
Yes, it's mighty inconvenient to have an office in a state that thinks your business activity is illegal. Maybe don't do that.
As I said earlier, the complaint says "within or from New York OR to persons in New York" (emphasis mine).
This is inconsistent with your statement "It seems New York is not attempting to have any say over what Kalshi does outside of New York, when it does not involve New York residents."
That sounds like a voluntary action they can decide to do, not something the state of New York is telling them to do. As far as I can tell, all they're being asked is to not break New York laws within New York. It's unfortunate if that was the whole extent of their business.
If a state decided to make trampolines illegal (sale, use and manufacture), it would suck to own a trampoline factory in that state. That's still not a nationwide ban.
By letter dated October 24, 2025, the Gaming Commission directed Kalshi to “cease and
desist from illegally operating, advertising, promoting, administering, managing, or otherwise
making available an unlicensed mobile sports wagering platform in New York State in
connection with any sports event.”
A sibling comment has provided the source, but I want to separately emphasize that you must unlearn your instincts that the federal government wouldn't lie to you. Most government agencies are under a top-down mandate to tell lies whenever Donald Trump or someone who's bribed him would benefit.
I (unfortunately) think that the NY AG screwed up our opportunity to press that question by aiming nationally. The CFTC got to skip that and just shut down the national TRO.
I'd love to see another state push for a state-specific restriction and see how that plays out.
There were 3 alarmingly assertive, not even wrong in the Pauli sense, comments I saw in this thread, this being the last, and it turns out they’re all by you.
HN in general gets ahead of its skis a ton on legal stuff, it’s not personal. I deserve what I’ll get for speaking plainly to you, I hope the fact I’m speaking plainly and incurring cost will encourage you to move slightly more slowly.
In order:
Regulating interstate commerce is a fed thing, yes, that doesn’t mean states are unable to do anything at all to companies operating in multiple states. It was jarring to hear that described as one of the most settled principles we have.
NYS was not asking for a national TRO. It was jarring to read that asserted.
The first paragraph of the CFTC release we are commenting on says it ordered Kalshi to be able operate nationally. It was jarring to read it was made up that the CFTC ordered it to be able to operate.
If you read the complaint, the prayer for relief is quite clear that they only are trying to stop them from operating in new york, deliberately offering gambling to new yorkers, etc.
> August 11, 2026
>
> WASHINGTON — The Commodity Futures Trading Commission today exercised its emergency authority in response to KalshiEX, LLC’s notification of a market emergency and ordered the exchange to continue to operate in accordance with the Commodity Exchange Act’s Core Principles.
The "order" there is effectively a reset button to the TRO. Its function is to say "you can ignore the TRO and continue business as usual". It doesn't force Kalshi to continue operating if they had their own reasons for pausing operations.
You are simply wrong. The order invokes statutory emergency authority to require markets to operate as before. It’s materially different from cancelling the TRO (which has not been granted)
I've got no love for Kalshi, but "orders Kalshi to continue operate in New York" doesn't seem to be present anywhere in the actual release.
The article presents the sequence of events as:
1. The State of NY files a lawsuit against Kalshi under the theory that it can be regulated by state gambling laws.
2. The State of NY files for a temporary restraining order requiring Kalshi to halt trading nationally, not just in NY.
3. Kalshi reaches out to the CFTC to claim that NY doesn't have the authority to regulate interstate commerce.
4. The CFTC agrees and uses their authority to override the TRO.
That seems pretty aligned with how interstate commerce is regulated and managed in the US.