US Regulator Escalates Battle Against States Over 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 earlier lawsuit against Coinbase and Gemini, alleging that their prediction market contracts breached state gambling laws. The CFTC contends 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 undermines their ability to safeguard citizens. The regulator's chairman has made this initiative a priority, with similar lawsuits filed against Arizona, Connecticut, and Illinois. The CFTC argues that state lawsuits are attempting to limit access to event contracts and undermine its regulatory authority, while New York officials maintain that they are enforcing state laws to protect consumers from gambling violations.