US Regulator Sues New York to Block State's Efforts to Restrict Prediction Markets

In its latest move to assert nationwide regulatory authority, the US Commodity Futures Trading Commission has filed a lawsuit against New York, seeking to prevent the state from interfering with prediction market firms. This action follows New York's recent lawsuits against Coinbase and Gemini, alleging that their prediction market contracts breached state gambling laws. The CFTC maintains that federal law grants it 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 the CFTC's stance threatens the states' ability to protect their citizens. The regulator has also sued Arizona, Connecticut, and Illinois, claiming that event contracts are derivatives instruments under federal jurisdiction. CFTC Chairman Mike Selig has prioritized this initiative, stating that the agency will protect Americans' access to event contracts and its sole regulatory jurisdiction over prediction markets. In response, New York officials have emphasized their commitment to enforcing state laws on gambling, designed to safeguard consumers and hold accountable any platforms violating these laws.