US Regulator Takes New York to Court Over Prediction Market Dispute

In its latest move to assert nationwide regulatory authority, the US Commodity Futures Trading Commission has filed a lawsuit against New York, seeking to prevent the state from interfering with prediction market firms. This development comes after New York recently took legal action against cryptocurrency exchanges Coinbase and Gemini, alleging that their prediction market contracts breached state gambling laws. The state had also previously targeted Kalshi, demanding that it discontinue 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 this claim, arguing that such a stance undermines states' ability to protect their citizens. CFTC Chairman Mike Selig has made this initiative a top priority, with the agency also suing other states such as Arizona, Connecticut, and Illinois, to establish federal jurisdiction over event contracts. In response to the lawsuit, New York officials stated that they are enforcing state laws on gambling to protect consumers, and will hold accountable any platforms that violate these laws.