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. The action follows New York's own lawsuit against Coinbase and Gemini earlier in the week, alleging that their prediction market contracts breached state gambling laws. The state had previously targeted Kalshi, demanding that it shut down its sports wagering platform. 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, 37 state attorneys general, including New York's Letitia James, have countered that this stance undermines states' ability to protect their citizens. CFTC Chairman Mike Selig has made this a key initiative, with similar lawsuits filed against Arizona, Connecticut, and Illinois. Selig stated that CFTC-registered exchanges face an onslaught of state lawsuits seeking to limit access to event contracts and undermine the CFTC's regulatory jurisdiction. In response, James and New York Governor Kathy Hochul asserted that they are enforcing state laws to protect consumers, arguing that the administration prioritizes corporations over consumers' interests.