The Commodity Futures Trading Commission is suing New York to block the state from applying its gambling laws to federally regulated prediction market platforms. The federal agency argues it has exclusive authority over these markets, while over three dozen states support Massachusetts in a related case against platform Kalshi, insisting state gambling oversight remains paramount. This legal battle highlights a significant conflict over regulatory jurisdiction concerning prediction contracts offered by firms like Coinbase, Gemini, and Kalshi.
The Commodity Futures Trading Commission (CFTC) has filed a lawsuit against New York to stop the state from applying its gambling laws to federally regulated prediction market platforms. In its complaint, the agency seeks a declaratory judgment and a permanent injunction against the state’s enforcement actions.
CFTC Chair Michael Selig stated “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.” Earlier this week, New York filed suits against Coinbase and Gemini, claiming their offerings violated state gambling rules.
A coalition of 37 states and Washington, D.C. recently filed an amicus brief supporting Massachusetts in its case against Kalshi. They urge the state’s highest court to reject Kalshi’s argument that federal law allows nationwide sports betting without following state rules.
The states argue that the 2010 federal financial law was never meant to legalize or control sports betting and does not clearly override state authority. They contend that removing state oversight would weaken existing protections for licensing, age limits, fraud prevention, and gambling addiction.
State officials have recently taken a more aggressive stance against prediction markets. States including Arizona, Connecticut, and Illinois are seeking to enforce gambling laws against these platforms.
Earlier this month, a Nevada judge extended a ban preventing Kalshi from offering event-based contracts in the state. Regulators there argue the products amount to unlicensed gambling.
