US CFTC Takes New York to Court Over Prediction Market Dispute

In its latest move to assert nationwide authority, the US Commodity Futures Trading Commission has filed a lawsuit against New York, seeking to halt the state's efforts to curb prediction market operations. This development comes after New York took legal action against Coinbase and Gemini earlier in the week, alleging their prediction market contracts breached state gambling laws. Last year, the state also targeted Kalshi, demanding the cessation of its sports wagering platform. The CFTC, as the federal derivatives regulator, claims that states have no right to interfere with these firms, citing federal law that grants the agency 'exclusive jurisdiction' over commodity futures, options, and swaps traded on federally regulated exchanges. However, 37 state attorneys general, including New York's Letitia James, have signed a legal brief arguing that this stance threatens states' ability to protect their citizens. CFTC Chairman Mike Selig has made this initiative a priority, with the agency also suing Arizona, Connecticut, and Illinois over similar issues. 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 platforms that violate these laws.