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. This action follows the state's own lawsuit against Coinbase and Gemini, alleging that their prediction market contracts breach state gambling laws. Similarly, New York had previously targeted Kalshi, demanding the cessation of its sports wagering platform. The CFTC argues that, as the federal derivatives regulator, it holds 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 with a legal brief arguing that this stance threatens their ability to protect citizens. CFTC Chairman Mike Selig has prioritized this initiative, with the agency having also sued 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 on gambling to protect consumers, emphasizing that they will hold accountable any gambling platforms, including prediction markets, that violate these laws.