US Regulator Takes New York to Court Over Prediction Markets 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 follows the state's recent actions against Coinbase, Gemini, and Kalshi, in which it alleged that their prediction market contracts breached state gambling laws. 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 coalition of 37 state attorneys general has countered that this stance threatens the states' ability to protect their citizens. The CFTC chairman has made this initiative a top priority, with similar lawsuits filed against Arizona, Connecticut, and Illinois. The regulator claims that state lawsuits are attempting to limit access to event contracts and undermine its authority over prediction markets. In response, New York's attorney general and governor have stated that they are upholding state laws on gambling to protect consumers, and will continue to defend these laws in court.