US Regulator Escalates Battle Against States Over Prediction Markets

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 is part of a broader effort by the federal regulator to shield prediction market companies from state-level interference. The lawsuit follows New York's recent actions against major cryptocurrency exchanges Coinbase and Gemini, as well as its earlier move against Kalshi, demanding that these platforms cease operations due to alleged violations of state gambling laws. The CFTC contends that federal law empowers it with exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges, thereby preempting state law. However, a coalition of 37 state attorneys general has pushed back, arguing that this stance threatens the states' ability to protect their citizens. The CFTC's chairman has made this issue a priority, with similar lawsuits filed against Arizona, Connecticut, and Illinois. The regulator claims that state lawsuits undermine its authority and limit Americans' access to event contracts. In response, New York officials have reaffirmed their commitment to enforcing state gambling laws, stating that they will hold accountable any gambling platforms, including prediction markets, that violate these laws.