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 lawsuit comes after New York took legal action against Coinbase and Gemini, claiming 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 maintains that 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 signed a legal brief arguing that this stance undermines states' ability to protect their citizens. The CFTC has also sued other states, including Arizona, Connecticut, and Illinois, over the regulation of event contracts. Chairman Mike Selig has made this a key initiative, stating that the CFTC's sole regulatory jurisdiction over prediction markets is being challenged by state lawsuits. In response, 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.