- CFTC seeks court ruling to affirm sole authority over prediction markets and stop state enforcement actions.
- New York and other states argue event contracts resemble gambling, creating jurisdiction conflict with federal regulators.
- Dispute could shape national market rules as multiple states challenge classification of prediction market contracts.
The Commodity Futures Trading Commission filed a lawsuit on April 24, 2026, in New York federal court against the State of New York. The agency seeks to block state enforcement of gambling laws on federally regulated prediction markets. Chairman Michael S. Selig said the action defends the CFTC’s exclusive authority over event contracts.
Federal Agency Challenges State Enforcement
The lawsuit was filed in the U.S. District Court for the Southern District of New York. According to the CFTC, New York issued cease-and-desist letters and pursued civil actions against registered entities. The agency argues these steps interfere with federal oversight of designated contract markets.
Notably, the complaint seeks a declaratory judgment confirming the CFTC’s sole jurisdiction. It also requests a permanent injunction to stop New York from applying state gambling laws. Chairman Michael S. Selig said the agency will not allow states to undermine its authority.
Dispute Expands Across Multiple States
The conflict has grown beyond New York in recent weeks. The CFTC previously filed similar lawsuits against Arizona, Connecticut, and Illinois. In each case, the agency claimed states attempted to regulate event contracts classified as swaps under federal law.
Meanwhile, New York has pursued enforcement actions against several platforms. The state filed lawsuits against Coinbase and Gemini, alleging unlicensed gambling activity. Authorities also targeted Kalshi following a cease-and-desist letter tied to sports-related contracts.
Legal Battle Centers on Market Classification
The main issue of the dispute is how event contracts are defined. The CFTC maintains these products fall under the Commodity Exchange Act as derivatives. However, states argue certain contracts resemble gambling and fall within local jurisdiction.
Federal filings warn that conflicting rules could disrupt national markets. The agency stated that without court intervention, states may continue enforcement actions. The complaint names New York officials, including Governor Kathy Hochul and Attorney General Letitia James.
Separately, the CFTC and Justice Department continue similar enforcement actions. These include cases tied to insider trading allegations involving prediction markets. The broader legal conflict now moves forward in federal court as both sides seek clarity.
