US CFTC Expands Lawsuit to New York Over Regulatory Authority on Prediction Markets

In its latest move to assert nationwide regulatory control over prediction market firms, the US Commodity Futures Trading Commission filed a lawsuit against New York on Friday. This action comes after New York recently sued major cryptocurrency exchanges Coinbase and Gemini, alleging their prediction market contracts breached state gaming laws, and had previously targeted Kalshi, demanding the cessation of its sports wagering platform. The CFTC maintains that, as the federal derivatives regulator, it holds exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges, effectively preempting state law. This position is contested by 37 state attorneys general, including New York's Letitia James, who argue that such a stance undermines states' ability to protect their citizens. CFTC Chairman Mike Selig has prioritized this initiative, with similar lawsuits filed against Arizona, Connecticut, and Illinois, asserting that event contracts fall under federal jurisdiction as derivatives instruments. In response to the lawsuit, New York Attorney General James and Governor Kathy Hochul stated that they are upholding state gambling laws designed to protect consumers, whether in prediction markets or casinos, and will hold accountable any gambling platforms, including prediction markets, that violate these laws.