US Regulator Takes New York to Court Over Prediction Markets 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. The state had previously taken action against Coinbase, Gemini, and Kalshi, alleging that their prediction market contracts breached state gambling laws. The CFTC, however, maintains that federal law gives it exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges, thereby preempting state law. This stance has been met with resistance from 37 state attorneys general, who argue that the CFTC's position threatens their ability to protect citizens. The regulator's chairman has made this a key initiative, with similar lawsuits filed against Arizona, Connecticut, and Illinois. The dispute centers on the classification of event contracts as derivatives instruments within federal jurisdiction. While the CFTC claims that state lawsuits undermine its regulatory authority, New York officials assert that they are enforcing state laws to protect consumers from gambling violations.