US Regulator Takes New York to Court Over Prediction Markets Dispute

In its latest move to assert nationwide regulatory control over prediction market companies, the US Commodity Futures Trading Commission has filed a lawsuit against New York. This action follows the state's own lawsuit against cryptocurrency exchanges Coinbase and Gemini, alleging their prediction market contracts breached state gaming laws. New York had previously targeted Kalshi, demanding the cessation of its sports betting 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, 37 state attorneys general, including New York's Letitia James, have countered this stance in a legal brief supporting states' rights to protect their citizens. CFTC Chairman Mike Selig has prioritized this initiative, with similar lawsuits filed against Arizona, Connecticut, and Illinois. The CFTC claims that event contracts are derivatives instruments under federal jurisdiction. In response, New York officials stated they are upholding state laws on gambling, prioritizing consumer protection and vowing to hold accountable any platforms, including prediction markets, that violate these laws.