- The CFTC invoked Section 8a(9) emergency power Aug. 11 to keep Kalshi’s exchange operating nationwide.
- New York’s suit seeks at least $36 billion from Kalshi, an exchange whose publicly reported valuation is $22 billion.
- Texas is not among the nine states the CFTC has sued over event-contract enforcement.
- A Texas Senate committee is studying the prediction-market loophole ahead of the session that opens Jan. 12, 2027.
WASHINGTON – The U.S. Commodity Futures Trading Commission invoked emergency powers Aug. 11 to order Kalshi to keep its exchange open, answering a New York shutdown bid the agency found would cut off event contracts nationwide, including in Texas.
A Rarely Used Power, Invoked Twice In Four Weeks
KalshiEX LLC notified the commission of a market emergency on Aug. 1. That was the day after New York Attorney General Letitia James sued in state court in Manhattan and moved for a temporary restraining order barring the exchange from offering contracts on sports, culture, elections and other events within or from New York.
Ten days later the commission ordered Kalshi to continue exercising its functions as an exchange in accordance with the Commodity Exchange Act’s core principles. It acted under Section 8a(9) of the act, which lets the agency direct a registered entity to take whatever action is needed to maintain orderly trading once the commission has reason to believe an emergency exists.
Kalshi has held designation as a contract market since Nov. 3, 2020, and lists its event contracts as swaps. The order rests on the exclusive jurisdiction the act gives the commission over swaps traded on designated contract markets. Left standing, the commission found, New York’s suit would make a single state “effectively become the nationwide regulator of event-contract swaps.”
The agency had reached for the same authority four weeks earlier, on July 14, when it directed Kalshi to fulfill open trades involving Michigan residents.
Why A New York Case Decides What Texans Can Trade
The order’s reach follows from where Kalshi keeps its headquarters, not from where its customers live. Because the exchange is based in New York, an order barring it from offering contracts within or from that state would stop it from serving anyone, inside or outside New York, the commission found.
The order does not touch the state ban on sports wagering or any other part of the legal picture facing Texas gambling sites.
The remedy New York seeks is larger than the company. The state filed at 12:01 a.m. on July 31 and the case has since been removed to federal court in the Southern District of New York. It asks for disgorgement of all profits from event contracts plus a penalty of three times that amount, and seeks at least $36 billion in compensatory damages. Kalshi’s publicly reported valuation is $22 billion, a figure New York acknowledged in its own verified petition.
Review of the order itself is narrow. Under Section 8a(9), an emergency order may be challenged only in the federal appeals court covering the challenger’s residence or principal place of business, or in the D.C. Circuit.
Texas Has Not Sued, And Nothing Has Changed There
The commission has sued nine states over their attempts to apply gambling law to event contracts: Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin. Texas is not on that list, and nothing in the Aug. 11 order changes what a trader in Houston or Dallas can buy.
That matters because Texas has no legal online sportsbooks and no commercial casinos, which leaves the exchanges as the only federally regulated venue where a Texan can take a position on a game. Federal preemption has let Kalshi take Texas sports bets despite the state ban, and that has settled into the working rule.
The order preserves that status quo rather than expanding it, changing none of the terms on which Texas prediction markets already operate.
The state’s own response is still a study. Lt. Gov. Dan Patrick issued his 2026 interim charges to the Texas Senate on March 27, and one of them, headed “Closing Gambling Loopholes,” hands the State Affairs Committee this exact question.
Patrick told the panel to study what he called the “sudden inundation of prediction market gambling,” to look at how federal law is being used to get around the state’s gambling bans, and to map where the derivative markets Washington regulates meet the wagering Texas bars. The committee is to come back with recommendations aimed at protecting Texas elections and Texas sports.
What Happens Next
The charge sets no reporting deadline, and the next opening to act on it comes when the 90th Legislature convenes Jan. 12, 2027. Any bill it produces would have to survive the jurisdictional claim the commission asserted on Aug. 11. The New York case that prompted the order sits in federal court, where the commission said remand proceedings may delay it.