US Regulator Takes New York to Court Over Prediction Market Dispute

In its latest move to assert nationwide regulatory control, the US Commodity Futures Trading Commission has filed a lawsuit against New York, seeking to block the state's efforts to curb prediction market operations. This action follows New York's recent lawsuits against cryptocurrency exchanges Coinbase and Gemini, alleging that their prediction market contracts breach state gambling laws. The state had 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, 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 their ability to protect citizens. CFTC Chairman Mike Selig has prioritized this issue, with his agency also suing Arizona, Connecticut, and Illinois over similar matters. 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 continue to defend their laws in court.