Key Takeaways
- The federal commodities regulator launched legal action against New York leadership, including Governor Kathy Hochul and AG Letitia James, challenging the state’s regulatory approach to prediction markets
- Federal authorities claim their jurisdiction over event trading platforms supersedes state-level gambling regulations
- New York previously issued enforcement actions against Kalshi and initiated lawsuits targeting Coinbase and Gemini for offering sports and political betting contracts
- The federal agency also intervened in a Massachusetts legal proceeding concerning Kalshi
- New York leadership responded defiantly, emphasizing their commitment to consumer protection and continued enforcement of state gambling statutes
The Commodity Futures Trading Commission has escalated its confrontation over prediction market oversight with coordinated legal maneuvers. On April 24, the federal regulator initiated a lawsuit against New York state while simultaneously intervening in ongoing litigation in Massachusetts.
The federal complaint was lodged in the U.S. District Court for the Southern District of New York. Named as respondents are Attorney General Letitia James, Governor Kathy Hochul, and executives from the New York State Gaming Commission.
At the heart of the dispute lies a jurisdictional question the CFTC has repeatedly raised. The regulator contends that federal oversight of event-based contracts must supersede state gambling statutes. The agency is seeking a permanent court order preventing New York authorities from enforcing their regulations.
This represents part of a broader pattern. The federal agency has pursued comparable legal challenges against Arizona, Connecticut, and Illinois in recent months.
The Path to Confrontation in New York
The federal lawsuit identifies two pivotal developments that prompted the legal action.
In October 2025, New York’s gaming regulatory body delivered a cease-and-desist order to Kalshi. The commission determined that the platform’s sports-related contracts constituted unlicensed sports wagering under state law.
Kalshi quickly countered by launching its own federal challenge against New York authorities shortly after receiving the enforcement notice.
More recently, New York initiated legal proceedings against both Coinbase and Gemini. The state requested permanent court orders preventing the cryptocurrency exchanges from facilitating trading on sports outcomes, electoral events, and similar prediction contracts.
New York has emerged as one of the most assertive states opposing the expansion of prediction market platforms. NYSGC Chair Brian O’Dwyer previously indicated the commission would evaluate whether entities licensed for sports betting in New York should be permitted to simultaneously operate prediction market services.
Both Governor Hochul and Attorney General James have previously expressed skepticism about prediction markets through public commentary prior to this legal confrontation.
Escalating Rhetoric Between Federal and State Authorities
CFTC Chairman Michael Selig issued a forceful statement. He characterized the situation as CFTC-regulated platforms facing “an onslaught of state lawsuits” designed to restrict availability of event contracts.
Selig characterized New York as “the most recent state to disregard federal law and decades of precedent.” He emphasized that the CFTC would actively prevent states from challenging its regulatory authority over these markets.
Governor Hochul and Attorney General James issued a unified response on Friday. They characterized the federal government’s position as “prioritising big corporations over consumers.”
The state leaders emphasized that New York’s gambling statutes exist to safeguard consumers. They pledged to continue holding prediction market operators accountable.
They concluded by stating they remain “eager to keep defending our laws in court.”
The federal regulator has also entered the Massachusetts legal arena. Attorney General James joined 37 fellow state attorneys general in submitting a court brief to the Supreme Judicial Court of Massachusetts. They requested judicial affirmation of a January decision that imposed a preliminary injunction on Kalshi.
The CFTC filed its own brief supporting Kalshi’s arguments in that proceeding. The agency employed a comparable strategy in February when Crypto.com contested Nevada’s position in the Ninth Circuit Court of Appeals.
The simultaneous moves in New York and Massachusetts mark the most recent phase of CFTC Chairman Selig’s strategy to resolve the jurisdictional controversy through litigation. Congressional members and industry watchers continue pressing the agency for clarity regarding its position on event-based trading contracts.
