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, aiming to prevent the state from interfering with prediction market firms. This action comes after New York recently sued cryptocurrency exchanges Coinbase and Gemini, alleging that their prediction market contracts breached state gambling laws, and previously targeted Kalshi, demanding it halt its sports betting platform. The CFTC argues that federal law grants 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 countered with a legal brief arguing that this stance threatens states' ability to protect their citizens. The CFTC has also sued other states, including Arizona, Connecticut, and Illinois, claiming event contracts fall within federal jurisdiction. Chairman Mike Selig has emphasized the importance of this initiative, stating that CFTC-registered exchanges face numerous state lawsuits seeking to limit access to event contracts and undermine the CFTC's regulatory authority. In response, New York officials have reiterated their commitment to enforcing state gambling laws, prioritizing consumer protection and vowing to hold accountable any gambling platforms, including prediction markets, that violate these laws.