US Regulator 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. The lawsuit is part of a broader effort to shield prediction market firms from state-level interference. Earlier in the week, New York had taken action against Coinbase and Gemini, alleging that their prediction market contracts contravened state gambling laws. The state had previously targeted Kalshi, demanding that it shut down its sports wagering platform. The CFTC maintains that, as the federal derivatives regulator, it has exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges. This stance has led to conflicts with states, which argue that they have the right to regulate these activities. A group of 37 state attorneys general, including New York's Letitia James, has signed a brief arguing that the CFTC's position threatens the states' ability to protect their citizens. CFTC Chairman Mike Selig has made this initiative a top priority, with the agency also suing Arizona, Connecticut, and Illinois over similar issues. 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, and will continue to defend these laws in court.