US CFTC Takes New York to Court Over Prediction Market Regulations

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 New York's own lawsuit against Coinbase and Gemini, alleging that their prediction market contracts breach state gambling laws. Similarly, 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 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 this stance threatens the states' ability to protect their citizens. CFTC Chairman Mike Selig has made this a priority, with the agency also suing Arizona, Connecticut, and Illinois over event contracts. Selig stated that CFTC-registered exchanges face numerous state lawsuits attempting to limit access to event contracts and undermine the CFTC's regulatory authority. In response, James and New York Governor Kathy Hochul asserted that they are enforcing state gambling laws to protect consumers, emphasizing that they will hold accountable any gambling platforms, including prediction markets, that violate these laws.