The federal agency that regulates prediction markets is challenging New York and Massachusetts in court.
Key Takeaways
- The CFTC filed a lawsuit against New York and an amicus brief in Kalshi’s battle with Massachusetts.
- The federal agency has now taken legal action against five U.S. states that are challenging sports event contract operators.
- CFTC Chair Michael Selig continues to say, “We will see you in court.”
The Commodity Futures Trading Commission (CFTC) announced on Friday that it filed a lawsuit against the Empire State and is joining prediction market operator Kalshi’s fight in Massachusetts after both jurisdictions had attempted to stop trading exchanges from offering sports event contracts there.
In other prediction market news, the CFTC is also fighting legal battles in Arizona, Illinois, and Connecticut, arguing that it, not state regulators, is the only agency that can regulate and punish prediction market platforms across the country. More than a dozen states with legal sports betting say Kalshi, Polymarket, and other prediction market companies aren’t licensed to offer sports “swaps” in those jurisdictions.
“CFTC-registered exchanges have faced an onslaught of state lawsuits seeking to limit Americans’ access to event contracts and undermine the CFTC’s sole regulatory jurisdiction over prediction markets,” CFTC Chair Michael Selig said in a statement.
New York is the latest state to ignore federal law and decades of precedent by seeking to enforce state gambling laws against @CFTC-registered derivatives exchanges. Today’s lawsuit builds upon the @CFTC’s ongoing efforts in other states to protect its exclusive jurisdiction over…
— Mike Selig (@ChairmanSelig) April 24, 2026
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Going after the Empire State
The lawsuit against the Empire State, New York’s Attorney General Leticia James, and the state gaming commission was filed in the U.S. District Court for the Southern District of New York, and the CFTC is seeking a declaratory judgment for exclusive regulatory authority of event contracts.
New York officials had previously sent cease-and-desist orders to prediction market operators. James recently filed a lawsuit last week against trading exchanges Coinbase and Gemini Titan in the Manhattan Supreme Court, seeking punitive damages in the billions of dollars.
“New York is the latest state to ignore federal law and decades of precedent by seeking to enforce state gambling laws against CFTC-registered exchanges,” Selig said. “As I’ve said before, the CFTC will not allow overzealous state governments to undermine the agency’s longstanding authority over these markets.”
Sports event contracts rapidly spread in early 2025, and multiple operators are trading prediction markets that are similar to sportsbook offerings.
USA v. New York
— Daniel Wallach (@WALLACHLEGAL) April 24, 2026
Likely will be assigned to Judge Analisa Torres, who suddenly becomes the most important judge in the US hearing a PM case.
If she denies Kalshi’s PI motion, the New York AG will be free to pursue nationwide disgorgement against Kalshi, Coinbase & Gemini Titan. pic.twitter.com/0cuCIvjByj
Joining Kalshi’s fight
Massachusetts has had some legal success already against Kalshi, winning a preliminary injunction against the prediction market platform earlier this year. However, as the battle continues, the CFTC entered the fray by filing an amicus brief in the Massachusetts Supreme Judicial Court in the Massachusetts vs. Kalshi case.
The CFTC outlines the history and structure of the Commodity Exchange Act incorporated by Congress, which gives the federal agency oversight of derivative markets.
“Some states continue to pursue ever-escalating, illegal enforcement actions against CFTC-regulated exchanges, despite rulings from multiple courts halting those efforts,” Selig said. “Congress has entrusted the CFTC with the sole authority to regulate commodity derivatives markets, including prediction markets. To any state that seeks to nullify federal law and seize authority over these markets, I say again: We will see you in court.”
