- The CFTC filed suit in federal court in New York to stop the state from applying gambling laws to CFTC-registered contract markets.
- The agency is seeking both a declaratory judgment on federal preemption and a permanent injunction against state enforcement.
- Chairman Michael Selig said the agency is defending its sole regulatory jurisdiction over prediction markets
The Commodity Futures Trading Commission has opened a new front in its fight over prediction markets, filing suit against New York to block the state from applying gambling laws to federally regulated platforms. The case adds New York to a growing list of states now facing federal action over event contracts.
The agency filed the lawsuit in the U.S. District Court for the Southern District of New York on April 24. The CFTC said the state has used cease-and-desist letters and civil enforcement actions against CFTC-registered entities, even though federal law gives the commission exclusive authority over those markets.
New York Becomes the Fourth State
The CFTC said its complaint seeks a declaratory judgment confirming that federal law preempts New York’s gambling enforcement against CFTC-registered contract markets. Moreover, the agency is asking the court for a permanent injunction that would stop the state from enforcing those laws against its registrants.
New York is now the fourth state named in this broader campaign. The commission said the lawsuit follows similar cases it has already brought in Arizona, Connecticut, and Illinois, all tied to event contracts offered on CFTC-registered designated contract markets.
The Fight Centers on Event Contracts
The legal dispute turns on who controls prediction platforms and event contracts. The CFTC argues that Congress gave it sole regulatory jurisdiction over these products when they are listed by CFTC-registered exchanges. New York, meanwhile, has tried to treat them under state gambling law through local enforcement tools.
That conflict has become more visible as prediction markets gain a larger audience. Event contracts tied to elections, sports, and macro outcomes have moved further into mainstream market discussion, and state regulators have increasingly challenged whether those products should be allowed inside their borders.
Nevertheless, the CFTC’s position in this lawsuit is that state gambling laws cannot override federal oversight where Congress has already assigned jurisdiction.
Selig Sharpens the Agency’s Line
CFTC Chairman Michael S. Selig used unusually direct language in the agency’s announcement. He said CFTC-registered exchanges have faced an “onslaught” of state lawsuits aimed at limiting access to event contracts and weakening the commission’s authority over prediction markets. He added that New York is the latest state to ignore federal law and decades of precedent by applying gambling laws to CFTC-registered exchanges.
Selig also said the CFTC will not allow state governments to undermine what he described as the agency’s longstanding authority over these markets. That language makes clear that the commission is treating these cases as more than isolated state disputes. It is building a broader federal defense of prediction market jurisdiction, one case at a time.
The New York lawsuit now puts that argument directly before a federal court in Manhattan. However, the court rules, the case will shape how far states can go when they try to apply local gambling laws to platforms already registered with the federal commodities regulator.
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