US Regulatory Body Takes New York to Court Over Prediction Market Dispute

In its latest move to assert nationwide regulatory authority, the US Commodity Futures Trading Commission has filed a lawsuit against New York. This action is part of a broader effort to protect the interests of prediction market firms. Earlier in the week, New York had taken legal action against Coinbase and Gemini, alleging that their prediction market contracts were in violation of state gambling laws. A similar action was taken against Kalshi last year, with the state demanding that the company cease operations of 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, thereby preempting state law. However, a coalition of 37 state attorneys general, including New York's Letitia James, has countered that this stance threatens the states' ability to protect their citizens. The CFTC has also sued other states, including Arizona, Connecticut, and Illinois, over similar issues. In a statement, CFTC Chairman Mike Selig emphasized the importance of protecting Americans' access to event contracts and the CFTC's regulatory jurisdiction over prediction markets. In response, New York Attorney General Letitia James and Governor Kathy Hochul stated that they are committed to enforcing state laws on gambling and protecting consumers, and will continue to defend their laws in court.