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. This action follows the state's recent lawsuits against cryptocurrency exchanges Coinbase and Gemini, alleging their prediction market contracts breached state gambling laws. New York had also previously targeted Kalshi, demanding the cessation of its sports wagering platform. The CFTC argues that, as the federal derivatives regulator, it holds 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, have countered that the CFTC's stance threatens the states' ability to protect their citizens. The CFTC's Chairman, Mike Selig, has made this initiative a priority, with the agency also suing Arizona, Connecticut, and Illinois over similar issues. In response to the lawsuit, New York Attorney General James and Governor Kathy Hochul stated that they are enforcing state laws on gambling to protect consumers, emphasizing that they will hold accountable any gambling platforms, including prediction markets, that violate these laws.