US Regulator Takes New York to Court Over Prediction Market Dispute

In its latest move to assert nationwide regulatory control over prediction market companies, the US Commodity Futures Trading Commission filed a lawsuit against New York on Friday. This action follows New York's recent lawsuit against Coinbase and Gemini, alleging that their prediction market contracts breached state gambling laws. The state had previously targeted Kalshi, demanding that it shut down its sports wagering platform. The CFTC argues that, as the federal derivatives regulator, it has exclusive jurisdiction over the regulation of commodity futures, options, and swaps traded on federally regulated exchanges, thereby preempting state law. However, 37 state attorneys general, including New York's Letitia James, have countered that this stance threatens the states' ability to protect their citizens. CFTC Chairman Mike Selig has made this initiative a top priority, and the agency has also sued Arizona, Connecticut, and Illinois over similar issues. The CFTC claims that state lawsuits are undermining its regulatory authority over prediction markets, while New York officials argue that they are enforcing state laws to protect consumers from gambling violations.