US Regulatory Body 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. This action comes after New York recently took legal action against Coinbase and Gemini, alleging that their prediction market contracts breached state gambling laws. The state had previously targeted Kalshi, demanding that it cease operations of its sports wagering platform. The CFTC maintains that, as the federal derivatives regulator, it has 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, including New York's Letitia James, has countered that this stance threatens their ability to protect citizens. The CFTC has also sued Arizona, Connecticut, and Illinois, claiming that event contracts fall under federal jurisdiction. Chairman Mike Selig has emphasized the importance of this initiative, stating that CFTC-registered exchanges face numerous state lawsuits aiming to limit access to event contracts and undermine the CFTC's regulatory authority. In response, New York Attorney General James and Governor Kathy Hochul have reaffirmed their commitment to enforcing state gambling laws, prioritizing consumer protection and holding accountable any platforms that violate these laws.