US Regulator Takes New York to Court Over Prediction Market Dispute

In its latest move to assert nationwide regulatory control, the US Commodity Futures Trading Commission has filed a lawsuit against New York, arguing that the state's efforts to curb prediction market firms are preempted by federal law. The lawsuit, filed in the US District Court for the Southern District of New York, claims that the CFTC has exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges. This development comes after New York sued Coinbase and Gemini earlier in the week, alleging that their prediction market contracts violated state gambling laws. The CFTC's action is part of a broader effort to shield prediction market firms from state-level interference, with similar lawsuits filed against Arizona, Connecticut, and Illinois. However, a group of 37 state attorneys general, including New York's Letitia James, has pushed back against the CFTC's stance, arguing that it threatens the states' ability to protect their citizens. CFTC Chairman Mike Selig has made this initiative a top priority since taking office, emphasizing the need to defend the CFTC's regulatory jurisdiction over prediction markets. In response to the lawsuit, New York Attorney General James and Governor Kathy Hochul stated that they are committed to upholding state laws on gambling, which are designed to safeguard consumers.