US Regulator Takes New York to Court Over Prediction Markets Dispute

In its latest move to assert nationwide regulatory authority, the US Commodity Futures Trading Commission has filed a lawsuit against New York, seeking to prevent the state from interfering with prediction market firms. This action follows New York's recent lawsuits against Coinbase and Gemini, alleging that their prediction market contracts breached state gambling laws. The CFTC argues that federal law grants it exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges, thereby preempting state law. However, a group of 37 state attorneys general, including New York's Letitia James, has countered that the CFTC's position threatens the states' ability to protect their citizens. The CFTC Chairman, Mike Selig, has made this initiative a priority, with similar lawsuits filed against Arizona, Connecticut, and Illinois. The dispute centers on the regulation of event contracts, which the CFTC claims are derivatives instruments within federal jurisdiction. In response to the lawsuit, New York Attorney General James and Governor Kathy Hochul stated that they are enforcing state laws on gambling to protect consumers, and will continue to defend their laws in court.