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CFTC Sues New York Over Authority in Prediction Market Regulation

By  |  April 26, 2026

The U.S. Commodity Futures Trading Commission filed a lawsuit against the state of New York on Friday, escalating a growing dispute over who holds authority to regulate prediction markets. According to Reuters, the federal regulator accused New York of overstepping its jurisdiction by pursuing legal action against crypto-linked platforms involved in event-based trading.

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    In a complaint submitted to a federal court in Manhattan, the CFTC argued that a lawsuit filed on April 21 by New York Attorney General Letitia James improperly encroaches on federal oversight. The agency stated that the state’s litigation “intrudes on the exclusive federal scheme Congress designed” to supervise commodity derivatives markets, including prediction markets, according to Reuters. The CFTC has made similar legal moves earlier this month, filing lawsuits against Arizona, Connecticut, and Illinois on April 2, per Reuters.

    The dispute centers on actions taken by James against Coinbase Financial Markets and Gemini Titan, which she alleges have been promoting what amounts to gambling through their event-based contracts. These contracts allow users to place wagers on outcomes such as elections or sporting events.

    In response, James and New York Governor Kathy Hochul issued a joint statement criticizing the federal government’s position. They accused the administration of Donald Trump of “prioritizing big corporations” over consumer protections.

    “New York’s gambling laws are designed to protect consumers, whether they are placing bets in a prediction market or a casino,” they said. “When gambling platforms, including prediction markets, violate our laws, we will not hesitate to hold them accountable. We look forward to continuing to defend our laws in court.”

    Read more: Federal Appeals Court Sides With CFTC on Jurisdiction Over Prediction Markets

    Prediction markets have gained traction in recent years, particularly after demonstrating notable accuracy in forecasting the outcome of the 2024 U.S. presidential election. Their real-time probability models, according to Reuters, outperformed traditional polling in predicting Trump’s victory.

    James has argued that the platforms operated by Coinbase and Gemini should have secured licenses from the New York State Gaming Commission. She described the companies’ event contracts as “quintessentially gambling,” asserting that outcomes are either beyond participants’ control or rely on chance.

    The attorney general also raised concerns about access, noting that both platforms allegedly allowed users aged 18 to 20 to participate, despite New York law requiring a minimum age of 21 for mobile sports betting.

    Gemini’s parent company, Gemini Space Station, is led by billionaire twins Tyler Winklevoss and Cameron Winklevoss, who serve as chief executive and president, respectively.

    Meanwhile, another player in the sector, Kalshi, has taken preemptive legal action of its own. The company filed a lawsuit in October against New York’s gaming commission in an effort to block any potential ban on event contracts. That case remains unresolved, according to Reuters.

    The outcome of these overlapping legal battles could shape the future regulatory framework for prediction markets in the United States, as state and federal authorities continue to clash over jurisdiction.

    Source: Reuters