YEREVAN (CoinChapter.com) —
Kalshi, a prediction market platform, filed a lawsuit against the Nevada Gaming Control Board and the New Jersey Division of Gaming Enforcement after both regulators issued cease and desist orders. These orders demanded that Kalshi pause its sports-related contracts in the two states.
Legal Arguments and Claims
Kalshi’s legal team argued that the contracts fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC), not state-level authorities. The company maintains that its event contracts are swaps, not sports-betting products, as the house does not control the market. Kalshi co-founder Tarek Mansour emphasized that prediction markets are a 21st-century innovation.
In addition, the Nevada Gaming Control Board issued a cease and desist order regarding Kalshi’s election contracts. A U.S. judge ruled in September 2024 that these contracts are legal, permitting them to trade without restriction in the U.S.
CFTC Shifts Regulatory Approach
On February 4, 2025, the Commodity Futures Trading Commission (CFTC) announced a shift in its regulatory strategy under Acting Chairman Caroline Pham. This change emphasizes fraud prevention and victim support, while ending the practice of regulation by enforcement. The CFTC’s Division of Enforcement will now focus on tackling fraud and protecting market participants rather than regulating through enforcement actions.
This reorganization will enhance the efficiency of the CFTC by streamlining previous task forces into two new entities: the Complex Fraud Task Force and the Retail Fraud and General Enforcement Task Force. These teams will handle inquiries and investigations related to market manipulation and fraud across various sectors.
The move reflects the CFTC’s renewed focus on ensuring market integrity and safeguarding participants from evolving fraudulent schemes. The agency aims to deploy its resources effectively to combat fraud without punishing innocent traders. This realignment is designed to improve enforcement while ensuring fairness, consistency, and due process in its actions.
This shift also follows growing concerns over the volume of regulatory actions under the previous administration and responds to the industry’s calls for clearer and more balanced enforcement. The CFTC’s focus on protecting the public and upholding the law aims to restore confidence in U.S. markets while preventing abuses that undermine market stability.