US Regulator Takes New York to Court Over Dispute on Prediction Markets

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 that their prediction market contracts breached state gambling laws. New York had also targeted Kalshi last year, demanding the cessation of its sports wagering 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 that this stance threatens the states' ability to protect their citizens. The CFTC has also sued Arizona, Connecticut, and Illinois, claiming event contracts fall under federal jurisdiction. Chairman Mike Selig has prioritized this initiative, stating that CFTC-registered exchanges face an onslaught of state lawsuits seeking to limit access to event contracts and undermine the CFTC's regulatory authority. New York officials have responded, stating that they are enforcing state laws on gambling to protect consumers, and will hold accountable any gambling platforms, including prediction markets, that violate these laws.