US CFTC Takes New York to Court Over Prediction Market Regulations

In its latest move to assert regulatory control, the US Commodity Futures Trading Commission filed a lawsuit against New York on Friday, seeking to protect its authority over prediction market firms. This action follows New York's recent lawsuit against Coinbase and Gemini, alleging their prediction market contracts breached state gambling laws. Last year, New York also targeted Kalshi, demanding it shut down its sports wagering platform. The CFTC argues that federal law grants it exclusive jurisdiction over commodity futures, options, and swaps, including those 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, arguing that such a broad interpretation of preemption undermines states' ability to safeguard their citizens. CFTC Chairman Mike Selig has made this a key initiative, with the agency also suing Arizona, Connecticut, and Illinois over event contracts. In response to the lawsuit, New York Attorney General James and Governor Kathy Hochul stated that they are upholding state laws on gambling, prioritizing consumer protection over corporate interests.