US CFTC 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 comes after New York recently sued major cryptocurrency exchanges Coinbase and Gemini, alleging that their prediction market contracts breached state gambling laws. The state had also previously targeted Kalshi, demanding that it shut down its sports betting platform. The CFTC argues that, as the federal derivatives regulator, it has exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges, rendering state laws ineffective. However, a coalition of 37 state attorneys general, including New York's Letitia James, has countered that the CFTC's stance threatens states' ability to safeguard their citizens. 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. Selig stated that CFTC-registered exchanges face numerous state lawsuits aimed at limiting access to event contracts and undermining the CFTC's regulatory authority. In response, New York Attorney General James and Governor Kathy Hochul asserted that they are enforcing state laws to protect consumers from gambling violations, emphasizing that they will hold accountable any platforms, including prediction markets, that breach these laws.