US CFTC Takes New York to Court Over Regulatory Dispute on Prediction Markets

In its latest move to assert nationwide authority over prediction market firms, the US Commodity Futures Trading Commission has filed a lawsuit against New York. This action comes after New York recently took legal action against Coinbase and Gemini, alleging that their prediction market contracts breached state gaming laws. New York had also previously targeted Kalshi, demanding that it cease operations of its sports wagering platform. The CFTC, as the federal regulator of derivatives, maintains that states should not interfere with these firms, arguing that federal law grants it exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges. This stance is being contested by 37 state attorneys general, including New York's Letitia James, who argue that such a broad interpretation of federal jurisdiction undermines states' ability to protect their citizens. CFTC Chairman Mike Selig has prioritized this initiative, with the agency also suing Arizona, Connecticut, and Illinois over similar issues. Selig stated that CFTC-registered exchanges face numerous state lawsuits aiming to restrict access to event contracts and undermine the CFTC's authority over prediction markets. In response, New York Attorney General James and Governor Kathy Hochul emphasized their commitment to enforcing state gambling laws, citing the need to protect consumers and hold accountable any gambling platforms, including prediction markets, that violate these laws.