US Regulator CFTC Takes New York to Court Over Prediction Market Dispute

In its latest move to assert nationwide regulatory control, the US Commodity Futures Trading Commission has filed a lawsuit against New York, seeking to prevent the state from interfering with prediction market firms. This action follows New York's recent lawsuit against Coinbase and Gemini, alleging that their prediction market contracts breached state gambling laws, as well as a similar case against Kalshi last year. The CFTC argues 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 the CFTC's stance threatens the states' ability to protect their citizens. CFTC Chairman Mike Selig has made this initiative a priority, with the agency also suing Arizona, Connecticut, and Illinois over event contracts. In response to the lawsuit, New York Attorney General James and Governor Kathy Hochul stated that they are enforcing state laws to protect consumers from gambling violations, and will continue to defend these laws in court.