US Regulator CFTC 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. The lawsuit is part of the agency's broader efforts to shield prediction market firms from state-level interference. Earlier in the week, New York had taken action against Coinbase and Gemini, alleging their prediction market contracts breached state gambling laws. A similar case was brought against Kalshi last year, with the state demanding the cessation of its sports wagering platform. The CFTC argues that federal law grants 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, including New York's Letitia James, has countered that the CFTC's stance threatens the states' ability to protect their citizens. CFTC Chairman Mike Selig has made this initiative a priority, with the agency having also sued Arizona, Connecticut, and Illinois over event contracts. In response to the lawsuit, New York Attorney General James and Governor Kathy Hochul stated that they are enforcing state laws on gambling to protect consumers, and that they will hold accountable any gambling platforms, including prediction markets, that violate these laws.