CFTC Takes New York to Court in Fight Over Who Regulates Prediction Markets

The Commodity Futures Trading Commission (CFTC) sued the State of New York on April 24, 2026, in the U.S. District Court for the Southern District of New York, seeking a ruling that federal law gives the agency exclusive authority over prediction markets and their event contracts. In its complaint, the CFTC asks for declaratory relief confirming its sole jurisdiction and a permanent injunction barring New York from applying state gambling laws to federally regulated prediction market activity. Chairman Michael S. Selig said the agency is moving to protect the CFTC's exclusive authority over event contracts, arguing that state actions threaten to undercut federal oversight of designated contract markets. According to the CFTC, New York issued cease-and-desist letters and pursued civil actions against registered entities, steps the agency says interfere with federal regulation of CFTC-registered derivatives exchanges. New York officials have argued that certain event contracts function like gambling and fall within state jurisdiction. The dispute turns on how these products should be classified: the CFTC contends they are derivatives governed by the Commodity Exchange Act, while states contend some resemble wagering. The clash has broadened beyond New York. The CFTC has filed similar suits against Arizona, Connecticut, and Illinois, alleging those states attempted to regulate event contracts treated as swaps under federal law. New York has also pursued enforcement against multiple platforms, filing lawsuits against Coinbase and Gemini over alleged unlicensed gambling activity. The state also targeted Kalshi after issuing a cease-and-desist letter tied to sports-related contracts. The CFTC warns that a patchwork of state enforcement could disrupt national markets. The complaint names New York officials including Governor Kathy Hochul and Attorney General Letitia James. Separately, the CFTC and the Justice Department continue other enforcement efforts, including cases linked to insider trading allegations involving prediction markets. The federal court case is expected to play a key role in defining national rules as more states challenge the legal status of prediction market contracts.