US Regulator Escalates Battle Against States Over 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. 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 have countered that this stance threatens their ability to protect citizens. The CFTC has also sued other states, including Arizona, Connecticut, and Illinois, over the classification of event contracts as derivatives instruments. The regulator's chairman, Mike Selig, has emphasized the importance of protecting Americans' access to event contracts and the CFTC's sole regulatory jurisdiction over prediction markets. In response, New York officials have stated that they are enforcing state laws on gambling to protect consumers, and will defend their laws in court.