US Regulator Takes New York to Court Over Prediction Market Dispute

In its latest move to assert nationwide regulatory control over prediction market firms, the US Commodity Futures Trading Commission has filed a lawsuit against New York. This action follows the state's earlier lawsuit against Coinbase and Gemini, alleging that their prediction market contracts breached state gambling laws. New York had also previously targeted Kalshi, demanding that it cease operations of its sports wagering platform. The CFTC maintains that, as the federal derivatives regulator, it has 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 stance threatens the states' ability to protect their citizens. The CFTC Chairman, Mike Selig, has made this initiative a priority since taking office, with the agency also suing Arizona, Connecticut, and Illinois over similar issues. The regulator argues that CFTC-registered exchanges are facing undue state lawsuits that undermine its regulatory authority. In response to the lawsuit, New York officials stated that they are enforcing state laws on gambling to protect consumers, emphasizing that they will hold accountable any gambling platforms, including prediction markets, that violate these laws.