US Regulator Expands Legal Battle to Protect Prediction Markets

In its latest move to assert nationwide regulatory authority, the US Commodity Futures Trading Commission has filed a lawsuit against New York, marking the continuation of its efforts to shield prediction market firms from state-level interference. This development comes on the heels of New York's own lawsuit against major cryptocurrency exchanges Coinbase and Gemini, alleging violations of state gambling laws through their prediction market contracts. Similarly, the state had previously targeted Kalshi, demanding the cessation of its sports wagering platform. The CFTC maintains that federal law grants it exclusive jurisdiction over commodity futures, options, and swaps, thereby preempting state law. However, a coalition of 37 state attorneys general has countered this stance, arguing that such a broad interpretation of preemption could undermine states' abilities to protect their citizens. The CFTC's actions are part of a larger initiative led by Chairman Mike Selig, who has made the protection of prediction markets a priority since assuming his role. The agency has also taken legal action against Arizona, Connecticut, and Illinois, asserting that event contracts fall within federal jurisdiction as derivatives instruments. Chairman Selig emphasized that the CFTC is working to safeguard Americans' access to event contracts and uphold the agency's regulatory authority over prediction markets. In response, New York officials reiterated their commitment to enforcing state gambling laws, emphasizing the importance of protecting consumers and holding gambling platforms accountable for any violations.