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 lawsuit against Coinbase and Gemini, alleging their prediction market contracts infringe upon state gambling laws, as well as a similar case against Kalshi last year. The CFTC argues that federal law grants it exclusive jurisdiction over commodity futures, options, and swaps, thereby preempting state law. However, a coalition of 37 state attorneys general, including New York's Letitia James, has countered that this stance undermines states' ability to protect their citizens. CFTC Chairman Mike Selig has made protecting prediction markets a key initiative, with similar lawsuits filed against Arizona, Connecticut, and Illinois. The regulator claims that state lawsuits threaten Americans' access to event contracts and the CFTC's regulatory authority. New York officials, including Attorney General James and Governor Kathy Hochul, have responded by stating their commitment to enforcing state gambling laws and holding accountable platforms that violate them.