US Regulator CFTC 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 own lawsuit against Coinbase and Gemini, alleging that their prediction market contracts breach state gambling laws. New York had previously targeted Kalshi, demanding that it shut down its sports wagering platform. The CFTC argues that federal law gives it 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 signed a legal brief arguing that this stance threatens the states' ability to protect their citizens. CFTC Chairman Mike Selig has made this initiative a priority, with the agency also suing Arizona, Connecticut, and Illinois over event contracts. The CFTC claims that state lawsuits are undermining its regulatory jurisdiction over prediction markets. In response, New York Attorney General James and Governor Kathy Hochul stated that they are enforcing state laws on gambling to protect consumers, and will hold accountable any gambling platforms that violate these laws.