The U.S. Commodity Futures Trading Commission filed suit against the State of New York on April 24, 2026, asking a federal court to confirm that it alone regulates prediction market event contracts and to stop the state from enforcing gambling laws against federally supervised markets. CFTC Chairman Michael S. Selig said the case is meant to defend the agency’s exclusive authority over event contracts.
Federal complaint targets New York enforcement steps
The case was filed in the U.S. District Court for the Southern District of New York. According to the CFTC, New York sent cease-and-desist letters to registered entities and pursued civil actions that interfered with federal oversight of designated contract markets. The complaint asks for a declaratory judgment affirming the CFTC’s sole jurisdiction and a permanent injunction barring New York from applying state gambling law to these products.
The filing names New York officials including Governor Kathy Hochul and Attorney General Letitia James. The agency argues that, without court action, states may keep bringing enforcement cases against products operating under a federal framework. That would leave national markets facing conflicting rules from one state to the next.
The dispute turns on how event contracts are classified
At the center of the case is a basic legal question: what exactly are event contracts? The CFTC says they fall under the Commodity Exchange Act as derivatives and, in these lawsuits, has argued that the contracts at issue are treated as swaps under federal law. States take a different view. They argue that some of these contracts look like gambling products and should fall within local jurisdiction.
The clash is no longer limited to New York. In recent weeks, the CFTC has filed similar lawsuits against Arizona, Connecticut, and Illinois, saying those states also tried to regulate event contracts that the agency considers federally governed. That expands the case from a single state dispute into a broader fight over whether prediction markets can operate under one national rulebook.
State actions have also reached major crypto-linked platforms
New York has already taken action against several platforms. The state sued Coinbase and Gemini, alleging unlicensed gambling activity. Authorities also moved against Kalshi after issuing a cease-and-desist letter tied to sports-related contracts. The current federal lawsuit is directed at New York itself, but the pressure on platforms is already visible in the enforcement record.
Separate from this complaint, the CFTC and the Justice Department are also pursuing related enforcement matters, including cases tied to insider trading allegations involving prediction markets. The broader legal battle is now moving through federal court, where both sides are seeking a clearer line on whether event contracts should be governed by federal derivatives law or treated by states as gambling products.