US Regulator Expands Lawsuit Against States to Safeguard Prediction Markets

In its ongoing effort to assert nationwide regulatory control, the US Commodity Futures Trading Commission has filed a lawsuit against New York, marking the latest development in a series of actions aimed at shielding prediction market firms from state-level interference. This move comes after New York took legal action against cryptocurrency exchanges Coinbase and Gemini earlier in the week, alleging their prediction market contracts breached state gaming laws. A similar case was brought against Kalshi last year, with the state demanding the cessation of its sports wagering platform. The CFTC, citing federal law, claims exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges, effectively preempting state law. However, a coalition of 37 state attorneys general, including New York's Letitia James, has countered with a legal brief arguing that this stance threatens the states' ability to protect their citizens. CFTC Chairman Mike Selig has made this initiative a top priority since assuming his role, with the agency also taking similar action against Arizona, Connecticut, and Illinois. In response to the lawsuit, New York Attorney General James and Governor Kathy Hochul stated that they are committed to enforcing state laws on gambling, prioritizing consumer protection and holding accountable any platforms that violate these laws.