U.S. CFTC adds New York to string of states its suing to stop prediction market pushback
The federal regulator has been suing states that seek to curtail prediction markets activity and claim it should be deemed state-regulated gaming.
What to know:
- The U.S. derivatives regulator, the Commodity Futures Trading Commission, just added New York to its growing list of states it’s suing to counter their own legal pursuit of the prediction markets industry.
- New York moved earlier this week to target platforms run by Coinbase and Gemini, so the CFTC is again suing to insist that the federal agency is the proper regulator of such businesses, not the states.
Earlier this week, New York sued Coinbase and Gemini, arguing that their prediction market contracts violated state gambling laws. And last year, the state had similarly targeted Kalshi, demanding it cease its sports wagering platform.
The CFTC, in its role as the federal derivatives regulator, has staked out a position that the states have no business interfering with those firms. The agency’s suit in the U.S. District Court for the Southern District of New York argues that federal law “designates the CFTC as the federal agency with ‘exclusive jurisdiction’ over the regulation of commodity futures, options, and swaps traded on federally regulated exchanges,” and that includes these CFTC-registered designated contract markets. State law is effectively preempted, according to the synchronized positions of the regulator and the growing industry it’s seeking to protect.
But also on Friday, 37 state attorneys general — including New York Attorney General Letitia James — signed onto a legal brief in one of the Kalshi legal fights in Massachusetts to argue that “Kalshi’s aggressive theory of preemption threatens the States’ longstanding ability to protect their citizens in this area.”
