US Regulatory Body 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. This action follows the state's recent lawsuit against Coinbase and Gemini, alleging that their prediction market contracts contravene state gambling laws. Similarly, New York had previously targeted Kalshi, demanding that it cease operations of its sports wagering platform. The CFTC maintains that, as the federal derivatives regulator, it has sole authority over the regulation of 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 this stance, arguing that such a broad interpretation of federal preemption undermines the states' ability to protect their citizens. The CFTC's chairman, Mike Selig, has made this initiative a key priority since assuming his role, with the agency having also taken similar action against Arizona, Connecticut, and Illinois. In response to the lawsuit, New York Attorney General Letitia James and Governor Kathy Hochul stated that they are committed to upholding state laws on gambling, emphasizing that these laws are designed to safeguard consumers and that they will continue to hold accountable any platforms that violate them.