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. The state had recently taken action against Coinbase and Gemini, alleging their prediction market contracts breached state gambling laws, and had also targeted Kalshi over its sports wagering platform. The CFTC maintains that federal law grants it exclusive jurisdiction over commodity futures, options, and swaps, thereby preempting state law. However, a group of 37 state attorneys general, including New York's Letitia James, has countered that this stance undermines their ability to protect citizens. The CFTC has also sued other states, including Arizona, Connecticut, and Illinois, over event contracts, which it claims fall under federal jurisdiction. CFTC Chairman Mike Selig has emphasized the need to protect Americans' access to event contracts and the agency's regulatory authority over prediction markets. In response, New York officials stated that they are enforcing state laws to safeguard consumers and will hold gambling platforms accountable for any violations.