CFTC Sues New York Over Prediction Market Restrictions, Expanding Multi-State Legal Battle

The U.S. Commodity Futures Trading Commission sued New York on April 24, 2026, in federal court, escalating a multi-state legal battle over prediction market regulation. The lawsuit, filed by CFTC Chairman Mike Selig who took office four months earlier, follows similar suits against Arizona, Connecticut, and Illinois, and comes after New York sued platforms Coinbase and Gemini for allegedly violating state gambling laws. The CFTC argues federal law grants it exclusive jurisdiction over commodity futures and options on regulated exchanges, preempting state authority, while New York Attorney General Letitia James and Governor Kathy Hochul maintain they are enforcing consumer protection gambling laws. The conflict intensified as 37 state attorneys general filed a brief in Massachusetts warning that the CFTC's preemption theory threatens states' longstanding ability to protect citizens from unregulated betting.

CFTC's Legal Campaign to Assert Federal Jurisdiction Over Prediction Markets

• ▪The U.S. Commodity Futures Trading Commission sued New York on Friday, April 24, 2026
• ▪Mike Selig took over the U.S. Commodity Futures Trading Commission four months before April 2026
• ▪The U.S. Commodity Futures Trading Commission filed its lawsuit against New York in the U.S. District Court for the Southern District of New York
• ▪The U.S. Commodity Futures Trading Commission has sued Arizona, Connecticut, and Illinois over event contracts
• ▪Mike Selig is the Chairman of the U.S. Commodity Futures Trading Commission
• ▪The U.S. Commodity Futures Trading Commission claims that CFTC-registered designated contract markets fall under its exclusive jurisdiction

State Enforcement Actions Against Prediction Market Platforms

• ▪37 state attorneys general signed onto a legal brief in a Kalshi legal fight in Massachusetts on Friday, April 24, 2026
• ▪New York targeted Kalshi in the previous year before 2026, demanding Kalshi cease its sports wagering platform
• ▪Letitia James is the Attorney General of New York
• ▪New York sued Coinbase and Gemini earlier in the week before April 24, 2026
• ▪New York argued that Coinbase and Gemini's prediction market contracts violated state gambling laws

Competing Claims of Federal Preemption Versus State Gambling Authority

• ▪New York's gambling laws are designed to protect consumers placing bets in prediction markets or casinos
• ▪37 state attorneys general argued in a Massachusetts legal brief that Kalshi's theory of preemption threatens states' longstanding ability to protect their citizens
• ▪Letitia James and Kathy Hochul stated they were enforcing New York state laws on gambling
• ▪The U.S. Commodity Futures Trading Commission argues that state law is preempted by federal law regarding prediction markets

Perspective of U.S. Commodity Futures Trading Commission

• ▪The U.S. Commodity Futures Trading Commission views New York's enforcement actions against prediction market platforms as improperly interfering with federal regulatory authority
• ▪The U.S. Commodity Futures Trading Commission contends that prediction markets on CFTC-registered exchanges are commodity derivatives rather than gambling products

Perspective of New York State (Letitia James and Kathy Hochul)

• ▪New York officials assert their responsibility to enforce state gambling laws to protect New York residents from unregulated betting activities

Perspective of 37 State Attorneys General

• ▪37 state attorneys general warn that accepting Kalshi's preemption arguments would erode states' historical power to regulate gambling within their borders
• ▪The coalition of 37 state attorneys general views the CFTC's jurisdictional claims as a threat to state sovereignty over consumer protection matters