US Regulator Takes New York to Court Over Prediction Market Dispute

In its latest move to assert nationwide control over prediction market firms, the US Commodity Futures Trading Commission has filed a lawsuit against New York. The lawsuit comes after New York recently took action against Coinbase and Gemini, alleging their prediction market contracts breached state gambling laws, and previously targeted Kalshi over its sports wagering platform. The CFTC maintains that it has exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges, thereby preempting state law. However, a group of 37 state attorneys general, including New York's Letitia James, has countered that this stance undermines states' ability to protect their citizens. The CFTC, under Chairman Mike Selig, has also sued Arizona, Connecticut, and Illinois, claiming event contracts fall under federal jurisdiction. Selig stated that CFTC-registered exchanges face numerous state lawsuits attempting to limit access to event contracts and undermine the CFTC's authority. In response, New York Attorney General James and Governor Kathy Hochul asserted that they are enforcing state laws to protect consumers from gambling violations, emphasizing that they will hold accountable any platform, including prediction markets, that breaches these laws.