Hobbs Strauss partner says CFTC cannot override court orders on Kalshi

Joe Webster, a partner at Hobbs Strauss, told an Indian Gaming Association webinar that the CFTC's emergency authority cannot lawfully require companies to keep operating prediction market contracts after a court has ordered them to stop. Webster said the decision to override such orders belongs to the judiciary, not to a federal commodities regulator.

The remarks follow the CFTC's move earlier this month to direct Kalshi to continue operating in New York despite Attorney General Letitia James's lawsuit seeking a restraining order and more than $36 billion in damages. Webster said the agency's position raises compliance questions that are now playing out across multiple states simultaneously.

His criticism found support in a recent Connecticut ruling, where federal judge Vernon D. Oliver held that the CFTC lacks authority to override a court's interpretation of federal law when reconciling Kalshi's contracts with state gaming statutes. The CFTC has responded by filing federal suits against at least nine states, including New York, Connecticut, Arizona, Illinois, and Kentucky, seeking to block state enforcement against federally regulated platforms.