US Regulator Takes New York to Court Over Prediction Markets Dispute

In its latest move to assert nationwide regulatory control over prediction market companies, the US Commodity Futures Trading Commission has filed a lawsuit against New York. The action follows New York's own lawsuits against cryptocurrency exchanges Coinbase and Gemini, alleging their prediction market contracts breached state gambling laws. Similarly, the state had previously targeted Kalshi, demanding it shut down its sports betting platform. The CFTC, responsible for regulating federal derivatives, claims states have no right to interfere with these companies, arguing that federal law grants it exclusive jurisdiction over commodity futures, options, and swaps traded on federally regulated exchanges. This position is contested by 37 state attorneys general, including New York's Letitia James, who argue that this stance undermines states' ability to protect their citizens. The CFTC has also sued Arizona, Connecticut, and Illinois, claiming event contracts fall under federal jurisdiction as derivatives instruments. CFTC Chairman Mike Selig has made this initiative a priority since taking office, stating that CFTC-registered exchanges face an onslaught of state lawsuits seeking to limit access to event contracts and undermine the CFTC's regulatory authority. In response, New York Attorney General James and Governor Kathy Hochul stated they are enforcing state laws on gambling, prioritizing consumer protection and holding accountable platforms that violate these laws.