US Regulator Takes New York to Court Over Prediction Market Dispute

In a bid to assert its 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 federal regulator to counter states' attempts to curb prediction market activities, which the agency believes fall under its purview. The lawsuit, filed in the US District Court for the Southern District of New York, argues that federal law grants the CFTC exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges, thereby preempting state law. The CFTC's stance is that states have no authority to interfere with these firms, a position that has led to lawsuits against Arizona, Connecticut, and Illinois. The agency's chairman, Mike Selig, has made this initiative a top priority, stating that CFTC-registered exchanges have faced numerous state lawsuits seeking to limit access to event contracts and undermine the CFTC's regulatory authority. In response to the lawsuit, New York Attorney General Letitia James and Governor Kathy Hochul released a statement emphasizing their commitment to enforcing state laws on gambling, which are designed to protect consumers. They vowed to hold accountable any gambling platforms, including prediction markets, that violate these laws.