CFTC Expands Lawsuit to New York in Bid to Block State-Level Regulation of Prediction Markets

In its latest move to assert nationwide regulatory control over prediction market firms, the U.S. Commodity Futures Trading Commission filed a lawsuit against New York on Friday. This action follows New York's recent lawsuit against Coinbase and Gemini, alleging their prediction market contracts breached state gambling laws, as well as a similar action taken against Kalshi last year. The CFTC argues that federal law grants it sole jurisdiction over commodity futures, options, and swaps, thereby preempting state law. However, 37 state attorneys general, including New York's Letitia James, have countered in a legal brief that this stance threatens states' ability to protect their citizens. The CFTC has also sued 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 undermined by state lawsuits. In response, New York officials asserted they are enforcing state gambling laws to protect consumers, vowing to hold accountable any platforms, including prediction markets, that violate these laws.