US Regulatory Body Takes Action Against New York Over Prediction Markets

In a recent lawsuit, the US Commodity Futures Trading Commission has taken New York to court in an effort to assert its nationwide regulatory control over prediction market firms. This move comes after New York filed a lawsuit against cryptocurrency exchanges Coinbase and Gemini, alleging that their prediction market contracts breached state gambling laws, and also targeted Kalshi for its sports wagering platform. The CFTC argues 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, has countered this claim, stating that the regulator's stance on preemption undermines the states' ability to protect their citizens. The CFTC has also taken similar action against Arizona, Connecticut, and Illinois, maintaining that event contracts are derivatives instruments within federal jurisdiction. Chairman Mike Selig has emphasized the importance of this initiative, citing the need to protect Americans' access to event contracts and the CFTC's regulatory authority over prediction markets. In response, New York officials have stated that they are enforcing state laws on gambling to protect consumers, and will continue to defend these laws in court.