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 follows the state's recent lawsuit against cryptocurrency exchanges Coinbase and Gemini, alleging that their prediction market contracts breach state gambling laws. New York had previously targeted Kalshi, demanding that it cease operations of its sports wagering platform. The CFTC argues that, as the federal derivatives regulator, it has sole authority 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. CFTC Chairman Mike Selig has prioritized this initiative, with the agency also suing Arizona, Connecticut, and Illinois over similar issues. The CFTC claims that state lawsuits threaten Americans' access to event contracts and the regulator's jurisdiction over prediction markets. In response, New York officials stated that they are enforcing state gambling laws to protect consumers, and will hold accountable any platforms that violate these laws.