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. The state had previously sued cryptocurrency exchanges Coinbase and Gemini, alleging their prediction market contracts breached local gambling laws, and also targeted Kalshi over its sports wagering 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, 37 state attorneys general have countered that this stance undermines their ability to protect citizens. The CFTC has also taken similar action against Arizona, Connecticut, and Illinois, claiming event contracts fall under federal jurisdiction. Chairman Mike Selig has prioritized this initiative, stating that the CFTC's regulatory authority over prediction markets is being challenged by state lawsuits. New York's Attorney General Letitia James and Governor Kathy Hochul have responded by affirming their commitment to enforcing state gambling laws and protecting consumers.