US Regulator CFTC 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 previously taken action against cryptocurrency exchanges Coinbase and Gemini, alleging that their prediction market contracts breached local gambling laws. Additionally, New York had targeted Kalshi, a sports wagering platform, last year. The CFTC argues that as the federal derivatives regulator, it has the sole authority to oversee these firms, and that state laws are preempted by federal legislation. However, 37 state attorneys general, including New York's Letitia James, have countered that the CFTC's stance undermines their ability to protect citizens. CFTC Chairman Mike Selig has made this a priority since taking office, with similar lawsuits filed against Arizona, Connecticut, and Illinois. The regulator claims that event contracts are derivatives instruments under federal jurisdiction. In response to the lawsuit, New York officials stated that they are enforcing state gambling laws to protect consumers, and will continue to defend these laws in court.