US CFTC Takes New York to Court Over Prediction Market Regulations

In its ongoing effort to assert nationwide regulatory control over prediction market firms, the US Commodity Futures Trading Commission has filed a lawsuit against New York. This action is the latest in a series of lawsuits aimed at shielding the agency's authority from state-level interference. The CFTC argues that federal law grants it exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges, thereby preempting state law. Recently, New York had taken action against several companies, including Coinbase and Gemini, for allegedly violating state gambling laws through their prediction market contracts. The CFTC, however, maintains that these contracts fall under its federal regulatory purview. The agency's chairman, Mike Selig, has made protecting the CFTC's jurisdiction over prediction markets a key initiative, and similar lawsuits have been filed against Arizona, Connecticut, and Illinois. In response to the lawsuit, New York Attorney General Letitia James and Governor Kathy Hochul stated that they are committed to enforcing state laws on gambling to protect consumers, emphasizing that they will hold accountable any gambling platforms, including prediction markets, that violate these laws.