TLDR
- The CFTC filed a lawsuit against New York state officials, including AG Letitia James and Governor Kathy Hochul, over prediction market regulation
- The suit argues federal authority over event contracts should override state gaming laws
- New York had previously issued cease-and-desist orders to Kalshi and sued Coinbase and Gemini over sports and election contracts
- The CFTC also filed a brief in a Massachusetts court case involving Kalshi
- New York officials fired back, saying their gambling laws protect consumers and they will keep enforcing them
The Commodity Futures Trading Commission is taking its fight over prediction markets to new fronts. On April 24, the agency filed a federal lawsuit against the state of New York and submitted a legal brief in a Massachusetts court case.
The CFTC’s complaint was filed in the U.S. District Court for the Southern District of New York. The defendants include Attorney General Letitia James, Governor Kathy Hochul, and leaders of the New York State Gaming Commission.
The core argument is one the CFTC has made before. The agency says its federal authority over event contracts should take priority over state gambling laws. It is asking the court for a permanent injunction against the New York officials.
This is not the first time the CFTC has made this kind of move. The agency has filed similar lawsuits against Arizona, Connecticut, and Illinois in recent months.
Why New York Became a Battleground
The lawsuit points to two key events that triggered the action.
In October 2025, the New York State Gaming Commission sent a cease-and-desist notice to Kalshi. The commission said the company’s sports contracts amounted to illegal sports betting without a state license.
Kalshi responded by filing its own federal lawsuit against New York officials almost immediately after receiving the notice.
Then last week, New York filed a lawsuit against Coinbase and Gemini. The state sought permanent injunctions to stop both companies from offering trading on sports, elections, and other event contracts.
New York has been one of the most vocal states pushing back against the growth of prediction markets. NYSGC Chair Brian O’Dwyer had previously suggested the commission examine whether gaming licensees operating in the state’s sports betting market should be allowed to also offer prediction markets.
Both Governor Hochul and AG James have made public statements critical of prediction markets before this lawsuit.
CFTC and New York Trade Barbs
CFTC Chairman Michael Selig did not hold back in his response. He said CFTC-registered exchanges have faced “an onslaught of state lawsuits” trying to limit access to event contracts.
Selig said New York is “the most recent state to disregard federal law and decades of precedent.” He added that the CFTC will not allow states to undermine its authority over these markets.
Hochul and James pushed back in a joint statement on Friday. They accused the federal government of “prioritising big corporations over consumers.”
The Governor and Attorney General said New York’s gambling laws are designed to protect customers. They said they would not hesitate to hold prediction market platforms accountable.
They added that they are “eager to keep defending our laws in court.”
The CFTC is also involved in a Massachusetts case. AG James and 37 other attorneys general filed a brief in the Supreme Judicial Court of Massachusetts. They asked a judge to uphold a January ruling that granted a preliminary injunction against Kalshi.
The CFTC submitted its own brief in that case, supporting Kalshi’s position. The agency took a similar step in February during Crypto.com’s dispute with Nevada in the Ninth Circuit Court of Appeals.
The actions in New York and Massachusetts represent the latest steps in CFTC Chairman Selig’s push to settle the jurisdiction dispute through the courts. Congress and other observers continue to question the agency about its stance on event contracts.
