US Regulator Expands Lawsuit Campaign to Protect Prediction Markets

In its latest move to assert nationwide regulatory control over prediction market firms, the US Commodity Futures Trading Commission has filed a lawsuit against New York. This action follows the state's efforts to curb the activities of prediction market companies, including Coinbase and Gemini, by alleging violations of state gambling laws. The CFTC maintains 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 the CFTC's stance on preemption undermines their ability to safeguard citizens. The regulator's chairman has made this initiative a top priority, with similar lawsuits filed against Arizona, Connecticut, and Illinois. The CFTC argues that its registered exchanges are facing undue restrictions from state lawsuits, while New York officials contend that they are simply enforcing state laws designed to protect consumers from gambling violations.