US Regulator Takes New York to Court Over Prediction Markets 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. The CFTC maintains that federal law gives it exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges, thereby preempting state law. However, 37 state attorneys general, including New York's Letitia James, have countered that this stance undermines states' ability to protect their citizens. The CFTC has also sued Arizona, Connecticut, and Illinois, claiming that event contracts fall under federal jurisdiction as derivatives instruments. The regulator's chairman, Mike Selig, has made this initiative a priority since taking office, stating that CFTC-registered exchanges face numerous state lawsuits seeking to limit access to event contracts and undermine the CFTC's regulatory authority. In response, New York officials have emphasized their commitment to enforcing state gambling laws and protecting consumers.