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. The state had recently taken action against cryptocurrency exchanges Coinbase and Gemini, alleging that their prediction market contracts breached local gambling laws. A similar case was brought against Kalshi last year, with the state demanding that the company cease operations of its sports wagering platform. The CFTC argues that federal law gives 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 issue a priority, with the agency having also sued Arizona, Connecticut, and Illinois over event contracts. The regulator claims that state lawsuits are undermining its authority and limiting Americans' access to event contracts. In response, New York officials stated that they are enforcing state laws on gambling to protect consumers, and will hold accountable any platforms that violate these laws.