The U.S. Commodity Futures Trading Commission escalated its battle over prediction markets on Friday, suing the state of New York in a bid to preserve what it says is exclusive federal control over event-contract trading.
The suit, filed in the U.S. District Court for the Southern District of New York, is the latest chapter in a widening clash between federal and state authorities—and a major moment for crypto- and prediction-market platforms. Earlier this week, New York sued Coinbase and Gemini, alleging that their prediction market contracts violate state gambling laws. Last year the state also went after Kalshi, ordering the firm to shut down a sports-wagering product.
The CFTC, which regulates derivatives, says federal law gives it sole authority over commodity futures, options and swaps traded on federally registered exchanges—including CFTC-registered designated contract markets that list event contracts. In its complaint, the agency argues state statutes are preempted when they seek to regulate those products, effectively blocking states from enforcing gambling rules against these platforms.
CFTC Chairman Mike Selig, who took the agency helm four months ago, has made defending that nationwide jurisdiction a top priority. The agency has already sued Arizona, Connecticut and Illinois, and Selig framed the New York action as part of a broader defense of U.S. consumers’ access to event contracts and the CFTC’s “sole regulatory jurisdiction” over prediction markets.
But the federal-state fight has backers on both sides. On Friday 37 state attorneys general, including New York AG Letitia James, signed onto a brief in a related Kalshi case in Massachusetts arguing that Kalshi’s sweeping preemption theory “threatens the States’ longstanding ability to protect their citizens in this area.”
New York’s top officials pushed back in their own statement. Governor Kathy Hochul and Attorney General Letitia James said the state is enforcing its gambling laws to protect consumers and accused the CFTC of siding with “big corporations” over New Yorkers. “When gambling platforms, including prediction markets, violate our laws, we will not hesitate to hold them accountable,” they said.
Why it matters for crypto and prediction markets
- The outcome could decide whether states can apply local gambling laws to prediction markets operated by crypto-native exchanges and other trading platforms.
- If the CFTC prevails broadly, it would reinforce a federal regulatory framework for event contracts and limit state-level enforcement.
- If the states prevail, platforms may face a patchwork of state restrictions that could constrain product offerings and market access.
UPDATE (April 25, 2026, 01:20 UTC): Adds statements from Attorney General Letitia James and Governor Kathy Hochul.
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