US Regulator Takes New York to Court Over Prediction Market Dispute

In its ongoing effort to assert nationwide regulatory control over prediction market firms, the US Commodity Futures Trading Commission has filed a lawsuit against New York. This move is the latest in a series of actions taken by the federal regulator to protect its authority over these firms. Earlier in the week, New York had sued major cryptocurrency exchanges Coinbase and Gemini, alleging that their prediction market contracts breached state gambling laws. The state had previously targeted Kalshi, a sports wagering platform, in a similar manner. 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, 37 state attorneys general, including New York's Letitia James, have countered that the CFTC's stance threatens the states' ability to safeguard their citizens. CFTC Chairman Mike Selig has made this initiative a top priority, with the agency having already sued 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, emphasizing that their primary concern is protecting consumers and holding accountable any gambling platforms that violate state laws.