US Regulator Takes New York to Court Over Prediction Market Dispute

In its latest move to assert nationwide control over prediction market firms, the US Commodity Futures Trading Commission has filed a lawsuit against New York. This action follows the state's decision to sue Coinbase and Gemini, alleging that their prediction market contracts breach 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 signed a legal brief arguing that this stance threatens the states' ability to protect their citizens. The CFTC has also sued Arizona, Connecticut, and Illinois, claiming that event contracts are derivatives instruments within federal jurisdiction. Chairman Mike Selig has made this initiative a top priority, stating that CFTC-registered exchanges face an onslaught of state lawsuits seeking to limit access to event contracts and undermine the CFTC's regulatory authority. In response, New York Attorney General James and Governor Kathy Hochul stated that they are enforcing state laws on gambling to protect consumers, and will hold accountable any gambling platforms that violate these laws.