US Regulator Takes New York to Court Over Prediction Market Dispute

In its latest move to assert nationwide regulatory control, the US Commodity Futures Trading Commission has filed a lawsuit against New York. This action is part of a broader effort to prevent states from interfering with the operations 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 case was brought against Kalshi last year, with the state demanding that the company cease its sports wagering platform. The CFTC argues that federal law grants it exclusive jurisdiction over the regulation of commodity futures, options, and swaps traded on federally regulated exchanges, thereby preempting state law. However, a group of 37 state attorneys general, including New York's Letitia James, have countered this stance, arguing that the CFTC's position threatens the states' ability to protect their citizens. This dispute is a key initiative for CFTC Chairman Mike Selig, who has also taken similar action against Arizona, Connecticut, and Illinois. The CFTC maintains that event contracts are derivatives instruments within federal jurisdiction. In response to the lawsuit, New York Attorney General Letitia James and Governor Kathy Hochul stated that they are enforcing state laws on gambling to protect consumers, and that they will continue to defend these laws in court.