The U.S. Commodity Futures Trading Commission (CFTC) has filed a federal lawsuit against New Mexico to prevent the state from enforcing its gambling laws against prediction-market platforms trading on sports-event contracts. This move follows New Mexico’s own lawsuit against prediction-market operator Kalshi, filed in state court on June 4, 2026. The CFTC’s suit asserts that it holds exclusive jurisdiction to regulate these markets and seeks a permanent injunction barring New Mexico officials, including Governor Michelle Lujan Grisham and Attorney General Raúl Torrez, from blocking such contracts.

This legal action marks New Mexico as the eighth state targeted by the CFTC since April, joining Illinois, Arizona, Connecticut, New York, Rhode Island, Wisconsin, and Minnesota in a series of state-level battles over the regulation of prediction markets. Critics, including attorney Dan Wallach, note that all states sued so far have Democratic governors and attorneys general, highlighting a political pattern in the regulator’s aggressive enforcement strategy. These conflicts come amidst industry debates over the nature of sports-event contracts and their similarity to traditional gambling.

Just two days before the New Mexico lawsuit, the CFTC published a 267-page notice of proposed rulemaking aimed at updating regulations for prediction markets. The proposed rules would restrict certain types of bets, such as in-game props and markets on sports below the collegiate level, but largely preserve popular markets based on game outcomes and player performances. Experts believe these new rules won’t resolve the broader legal disputes, since courts must still decide whether federal law preempts state gambling regulations.

Meanwhile, U.S. Senator Richard Blumenthal has been a vocal opponent of prediction markets, advocating for federal legislation to regulate the industry with measures to prevent insider trading and to bar marketing to minors. Blumenthal argues that prediction-market platforms are fundamentally a form of sports betting and should be overseen alongside traditional operators, but that states should retain the ability to enforce their own gambling laws. The ongoing legal battles over prediction markets are expected to eventually reach the U.S. Supreme Court for a definitive ruling.