CFTC Takes New York to Court Over Crypto Prediction Markets

The U.S. Commodity Futures Trading Commission sued New York after the state moved against Coinbase and Gemini over prediction market products. The case puts federal derivatives law against state gambling rules. It could shape how crypto linked prediction markets operate in the United States. The CFTC filed the lawsuit on April 24 in federal court in Manhattan. The agency asked the court to stop New York from using state gambling laws against CFTC registered contract markets. CFTC Says Federal Rules Control Prediction Markets The CFTC said federal law gives it exclusive authority over commodity derivatives markets. It argued that New York’s enforcement actions interfere with federally regulated platforms. The agency wants a declaratory judgment and a permanent injunction. That means it wants the court to confirm federal control and block state action in this area. The lawsuit followed New York Attorney General Letitia James’ April 21 cases against Coinbase Financial Markets and Gemini Titan. Her office accused the companies of offering illegal prediction market products under state gambling law. New York Targets Coinbase and Gemini Products New York said the platforms allowed users to trade contracts tied to sports, entertainment and elections. The state argued those products looked like gambling and required state licenses. James’ office also said the platforms allowed users aged 18 to 20. New York requires users to be at least 21 for mobile sports betting. Coinbase and Gemini are crypto companies, but the case reaches beyond crypto. The fight centers on whether event contracts should follow federal market rules or state gambling restrictions. Federal State Fight Spreads Beyond New York The CFTC has taken similar legal action in other states, including Arizona, Connecticut and Illinois. Those cases show a wider push to defend federal authority over prediction market platforms. The agency also filed a related brief in Massachusetts on April 24 in a separate Kalshi case. That filing supported federal oversight in another prediction market dispute. The outcome could affect Coinbase, Gemini and other firms that want to offer event contracts through regulated venues. It could also decide whether prediction markets grow under one federal framework or face different rules in each state.