The CME Group has filed a lawsuit against the Commodity Futures Trading Commission (CFTC) and Chairman Mike Selig, challenging the agency's decision to allow blockchain-based perpetual future products. According to CoinDesk, CME claims the CFTC is mislabeling the products and therefore misapplying the law, arguing that futures need an end date while perpetual contracts are designed for traders to speculate on assets without deadlines. CME's lawsuit argues these perps are harmful to its long-dated futures products and alleges the CFTC's sudden embrace of them did not consider the ramifications. CME Group's attempted 24/7 West Texas Intermediate (WTI) crude oil contract was blocked by the CFTC after the exchange made a bid to fast-track the product, with CME citing investors' desire to manage positions "whenever news breaks."
U.S. District Judge Analisa Torres denied KalshiEX's request for an emergency injunction pending appeal on July 27 in KalshiEX LLC v. Williams, while the company's separate emergency motion before the Second Circuit remains unresolved. According to the court order, Kalshi failed to show strong appellate prospects, irreparable harm, favourable equities, or public interest support for the emergency relief. The three-page order denies protection from New York enforcement while the appellate dispute continues, with the court noting that Kalshi had not met any of the four factors in the earlier preliminary injunction proceeding. Judge Torres found the alleged registration risk speculative and said the expected compliance costs were largely monetary and generally did not qualify as irreparable harm.
A federal judge blocked Minnesota's prediction market ban on Monday, handing Kalshi, Polymarket US, and the CFTC a preliminary win just days before the law's August 1 effective date. US District Judge Katherine Menendez found the Commodity Exchange Act (CEA) likely preempts the statute, issuing the order in three related cases against Minnesota, Attorney General Keith Ellison, Governor Tim Walz, and other state officials. Minnesota's law, Minn. Stat. § 609.7615, makes operating or creating a prediction market a felony, covering sports, elections, legal actions, pop culture, and statements by specific people, with advertising and providing data services also carrying criminal penalties. Kalshi reported over 90,000 verified Minnesota users as of May 26, with millions of dollars in open positions, with irreparable harm weighing heavily in the decision as sovereign immunity would bar any recovery of damages if enforcement proceeded.
The court independently read federal law and declined to defer to the CFTC's proposed interpretation, maintaining its earlier view that the Commodity Exchange Act does not displace every state gambling law governing transactions involving swaps. Judge Torres did not invalidate or formally reject the CFTC's June proposed rule, instead stating that courts must independently interpret statutes under the Supreme Court's Loper Bright decision. The CFTC proposal's public-comment period closed on July 27, but it remains a proposed rule rather than a final regulation. Kalshi pointed to the CFTC's June proposed rule, which states that the Commodity Exchange Act expressly preempts state laws regulating transactions on CFTC-registered exchanges, but the court maintained its narrower interpretation of federal preemption. CFTC Chair Mike Selig has been the lone voice of the agency since the commission operates with only one member currently, compared to the typical five-member structure.
Kalshi's debut offering emerged last month following the CFTC's approval, with the company reaching more than $1 billion in trading volume in less than a week. According to CoinDesk, non-U.S. perps volume reportedly grew to $60 trillion in volume last year, highlighting the rapidly growing market for these products. The CFTC determined that a case-by-case review process was suitable for perps, allowing the agency to open up the U.S. market through policy statements rather than formal rulemaking. The CFTC is opening up this market through a policy statement — not a new rulemaking that gives interested parties a chance to comment and steer the outcome, similar to the Securities and Exchange Commission's approach with crypto products.
Federal courts have reached different conclusions on the jurisdiction question, creating legal uncertainty for prediction markets. In April, the Third Circuit ruled 2-1 that New Jersey could not regulate Kalshi's sports-event contracts because they fell within the CFTC's exclusive jurisdiction, while courts in New York and several other states have taken a narrower view of federal preemption. The split widened when the Minnesota federal judge temporarily blocked that state's prediction market ban, with the judge finding that several Kalshi and Polymarket contracts likely met the federal definition of swaps. The court did not address the First Amendment claims raised by both exchanges, with those questions along with the implied preemption issue now awaiting a full merits ruling. The CFTC may not be prepared to enforce its emerging perps policy properly, according to CME Chairman Terry Duffy, who questioned how the agency would police U.S. participants from trading on illegal platforms.
