US Regulator Takes New York to Court Over Prediction Market Dispute

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 move is the latest in a series of actions taken by the agency to protect its jurisdiction over these firms. Earlier in the week, New York had filed a lawsuit against Coinbase and Gemini, alleging that their prediction market contracts were in violation of state gambling laws. The state had also previously targeted Kalshi, demanding that it cease operations of its sports wagering platform. 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. However, a group of 37 state attorneys general, including New York's Letitia James, has countered that the regulator's stance threatens the states' ability to protect their citizens. The CFTC's chairman has made this initiative a top priority, and the agency has also taken 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 enforcing state laws on gambling to protect consumers, and they will continue to defend these laws in court.