US Regulator Takes New York to Court Over Prediction Market Dispute

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. The lawsuit is part of a broader effort by the federal regulator to shield prediction market firms from state-level interference. Earlier in the week, New York had taken legal action against cryptocurrency exchanges Coinbase and Gemini, alleging that their prediction market contracts contravened state gambling laws. The CFTC argues that federal law gives it exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges, thereby preempting state law. However, a group of 37 state attorneys general has countered that the CFTC's stance threatens the states' ability to protect their citizens. The CFTC has also sued other states, including Arizona, Connecticut, and Illinois, over similar issues. The regulator's chairman has made this initiative a priority since taking office, stating that CFTC-registered exchanges have faced numerous state lawsuits seeking to limit access to event contracts. In response to the lawsuit, New York officials have stated that they are enforcing state laws on gambling to protect consumers, and will continue to defend their laws in court.