The US Commodity Futures Trading Commission (CFTC) has invoked emergency powers and directed Kalshi to continue its normal operations in accordance with the Commodity Exchange Act’s Core Principles. The regulator said New York’s enforcement action and request for a temporary restraining order constituted a market emergency. In a lawsuit filed on July 31, New York alleges that Kalshi operates an illegal, unlicensed gambling business by offering contracts tied to sports, elections, culture and other events. According to the CFTC, the state is seeking at least $36 billion in compensatory damages pending an accounting. New York also seeks restitution, disgorgement and penalties, including three times Kalshi’s alleged gains and $100,000 for each unauthorized sports-wagering offer or attempt in the state. New York’s proposed restraining order would bar Kalshi from offering event contracts in or from New York or to people in the state. The CFTC said the order could prevent Kalshi from offering all event contracts nationwide because the exchange is based in New York. It argued that the Commodity Exchange Act requires a uniform national derivatives market and that major disruptions threaten orderly trading and price discovery. The dispute centers on whether the federal Commodity Exchange Act preempts state gambling laws when they are applied to event contracts traded on federally regulated exchanges. The CFTC says it has exclusive jurisdiction over swaps traded on designated contract markets, including event contracts that Kalshi lists as swaps. CFTC Chair Michael Selig said Congress did not intend derivatives exchanges to face a “patchwork of state gaming laws.” Kalshi likewise argues that states cannot shut down a federally licensed exchange. A federal judge in a separate New York case denied Kalshi’s request for a preliminary injunction on July 7, finding at that stage that federal law did not preempt New York gambling laws as applied to Kalshi’s sports-event contracts. In another case filed in April, the CFTC sued New York to stop it from applying state gambling laws to CFTC-registered contract markets. Judge Jed Rakoff denied the agency’s emergency request for a temporary restraining order without prejudice, finding that it had not shown a high likelihood of success or a likelihood of irreparable harm. The latest CFTC order directs Kalshi to keep operating but does not end New York’s lawsuit or resolve the jurisdictional dispute. It is not a judicial ruling that federal law preempts state gambling enforcement. The CFTC says it has also sued eight other states to defend the jurisdiction granted to it by Congress. For Somali diaspora members in the United States who use such markets, the dispute leaves a practical uncertainty: federal licensing alone does not settle conflicts with state gambling rules, and the outcome now depends on the courts.