US Regulator Takes New York to Court Over Prediction Market 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. The lawsuit comes after New York recently took action against Coinbase and Gemini, alleging that their prediction market contracts breached state gambling laws. The state had previously targeted Kalshi, demanding that it shut down its sports wagering 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, including those involving prediction markets. According to the regulator, this federal authority supersedes state law. However, a group of 37 state attorneys general, including New York's Letitia James, has countered that the CFTC's stance threatens the states' ability to protect their citizens. The CFTC's chairman has made this a key initiative, and the agency has also sued other states, including Arizona, Connecticut, and Illinois, over similar issues. In response to the lawsuit, New York officials stated that they are enforcing state laws on gambling to protect consumers, and they will continue to defend their laws in court.