US Regulator Takes New York to Court Over Prediction Markets Dispute

In its latest move to assert nationwide regulatory control, the US Commodity Futures Trading Commission has filed a lawsuit against New York, seeking to block the state's efforts to curb prediction market operations. This action follows New York's recent lawsuits against Coinbase and Gemini, alleging that their prediction market contracts breached state gambling laws, as well as a similar action against Kalshi last year. The CFTC argues that, as the federal derivatives regulator, it has exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges, thereby preempting state law. However, a coalition of 37 state attorneys general, including New York's Letitia James, has countered that this stance threatens the states' ability to protect their citizens. The CFTC's chairman, Mike Selig, has made defending the agency's regulatory authority a key priority, with similar lawsuits filed against Arizona, Connecticut, and Illinois. In response, New York officials have emphasized their commitment to enforcing state laws on gambling, asserting that they will hold accountable any platforms, including prediction markets, that violate these laws.