US Regulator 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 took legal action against Coinbase and Gemini, alleging that their prediction market contracts breached state gambling laws. Last year, the state also targeted Kalshi, demanding that it shut down 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, 37 state attorneys general, including New York's Letitia James, have signed a legal brief arguing that this stance undermines states' ability to protect their citizens. The CFTC has also sued Arizona, Connecticut, and Illinois, claiming that event contracts fall under federal jurisdiction. CFTC Chairman Mike Selig has made this initiative a priority, stating that state lawsuits threaten the CFTC's regulatory authority over prediction markets. In response, New York officials claim they are enforcing state laws on gambling to protect consumers, and will defend their laws in court.