CoinDesk
The U.S. Commodity Futures Trading Commission sued New York on Friday in its latest action to block state-level crackdowns on prediction market platforms, arguing federal law gives the agency exclusive jurisdiction over event contracts traded on CFTC-registered designated contract markets. The suit, filed in the U.S. District Court for the Southern District of New York, comes two days after New York Attorney General Letitia James moved against Coinbase and Gemini over the same contracts. New York also went after Kalshi last year over its sports event contracts.
The action is the fourth state lawsuit the CFTC has launched under Chairman Mike Selig, who has made prediction-market preemption a signature initiative since taking the helm four months ago. The agency has previously sued Arizona, Connecticut, and Illinois on the same theory — that state regulation of federally listed event contracts is preempted by the Commodity Exchange Act. The agency argues 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 designation sweeps in prediction-market platforms.
Why it matters
The legal theory cuts across the heart of state consumer protection: 37 state attorneys general — including James — signed a brief Friday in the Kalshi fight in Massachusetts arguing that "Kalshi's aggressive theory of preemption threatens the States' longstanding ability to protect their citizens in this area." Selig framed the agency's position in starker terms, saying CFTC-registered exchanges "have faced an onslaught of state lawsuits seeking to limit Americans' access to event contracts and undermine the CFTC's sole regulatory jurisdiction over prediction markets." James and Governor Kathy Hochul hit back, calling prediction markets gambling platforms and vowing to keep enforcing state law.
Frequently asked questions
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Why is the CFTC suing New York over prediction markets?
The CFTC filed suit in the U.S. District Court for the Southern District of New York on Friday, arguing federal law gives the agency exclusive jurisdiction over event contracts traded on CFTC-registered designated contract markets — preempting state-level gambling enforcement against the same products.
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Which states has the CFTC now sued over prediction-market regulation?
The CFTC has now sued four states under Chairman Mike Selig: Arizona, Connecticut, Illinois, and New York, all on the theory that state regulation of federally listed event contracts is preempted by the Commodity Exchange Act.
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What did New York do that triggered the CFTC lawsuit?
New York Attorney General Letitia James moved against Coinbase and Gemini earlier in the week over their prediction-market contracts, and the state also went after Kalshi last year over its sports event contracts — both actions arguing the products violated state gambling law.
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What did 37 state attorneys general argue in the Kalshi case?
Thirty-seven state AGs, including New York's Letitia James, signed a brief in the Kalshi fight in Massachusetts arguing that 'Kalshi's aggressive theory of preemption threatens the States' longstanding ability to protect their citizens in this area.'
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How did CFTC Chairman Mike Selig frame the lawsuit?
Selig said CFTC-registered exchanges 'have faced an onslaught of state lawsuits seeking to limit Americans' access to event contracts and undermine the CFTC's sole regulatory jurisdiction over prediction markets,' positioning the action as a defense of federal regulatory authority.
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