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 decision to sue Coinbase and Gemini over alleged violations of state gambling laws, as well as its previous efforts to shut down Kalshi's sports wagering platform. The CFTC claims that federal law gives it exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges, thereby preempting state law. However, a group of 37 state attorneys general, including New York's Letitia James, has countered that the CFTC's stance threatens the states' ability to protect their citizens. CFTC Chairman Mike Selig has made this a key initiative since taking office, with the agency also suing Arizona, Connecticut, and Illinois over similar issues. The CFTC argues that its registered exchanges are facing an onslaught of state lawsuits that undermine their regulatory authority, while New York officials say they are simply enforcing state laws on gambling to protect consumers.