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 state had recently taken action against Coinbase and Gemini, alleging their prediction market contracts breached local gambling laws, and had also targeted Kalshi's sports wagering platform last year. 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, 37 state attorneys general, including New York's Letitia James, have countered that the regulator's stance threatens their ability to protect citizens. The CFTC has also sued Arizona, Connecticut, and Illinois, claiming event contracts fall under federal jurisdiction. Chairman Mike Selig has made this a key initiative, stating that CFTC-registered exchanges face numerous state lawsuits seeking to limit access to event contracts and undermine the regulator's authority. In response, New York officials asserted they are enforcing state laws on gambling to protect consumers, and will continue to defend their laws in court.