US Regulator Takes New York to Court Over Prediction Market Dispute

In its latest move to assert nationwide regulatory control, the US Commodity Futures Trading Commission has filed a lawsuit against New York, marking the latest development in an ongoing battle between the federal agency and states seeking to curb prediction market operations. The lawsuit comes after New York took legal action against Coinbase and Gemini, alleging that their prediction market contracts breached state gambling laws, and following a similar case against Kalshi last year. 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 that this stance undermines states' ability to protect their citizens. The CFTC's chairman, Mike Selig, has made this initiative a top priority since taking office, with the agency also suing Arizona, Connecticut, and Illinois over similar issues. In response to the lawsuit, New York Attorney General James and Governor Kathy Hochul stated that they are upholding state laws on gambling, prioritizing consumer protection and vowing to hold accountable any platforms that violate these laws.