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 own lawsuit against Coinbase and Gemini, alleging that their prediction market contracts breach state gambling laws. New York had previously targeted Kalshi, demanding that it shut down its sports betting platform. 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 stance threatens the states' ability to protect their citizens. CFTC Chairman Mike Selig has made this a key initiative, with similar lawsuits filed against Arizona, Connecticut, and Illinois. The regulator claims that state lawsuits are attempting to limit access to event contracts and undermine its authority over prediction markets. In response, New York officials stated that they are enforcing state laws on gambling to protect consumers, and will hold accountable any platforms that violate these laws.