The US Commodity Futures Trading Commission (CFTC) has filed a lawsuit against New York, arguing the state overstepped its authority by pursuing legal action against crypto-linked prediction market operators.
According to a Reuters report, the complaint was filed in federal court in Manhattan on April 25 and claims New York’s lawsuit against Coinbase Financial Markets and Gemini Titan interferes with the CFTC’s authority over commodity derivatives markets.
The dispute stems from legal action filed by New York Attorney General Letitia James on April 21, which accused Coinbase and Gemini of operating illegal gambling businesses through event-based contracts tied to elections and sports outcomes.
James argued the products should fall under New York gambling law and require licensing from the New York State Gaming Commission. Her office also alleged both platforms allowed users aged 18 to 20 to access the products, despite New York’s minimum age requirement of 21 for mobile sports betting.
In a joint statement, James and New York Governor Kathy Hochul said: “New York’s gambling laws are designed to protect consumers, whether they are placing bets in a prediction market or a casino.”
The CFTC’s lawsuit marks its fourth legal challenge against state regulators this month after filing similar cases against Arizona, Connecticut and Illinois on April 2.
The agency’s latest action follows a series of court victories for prediction market operators. Earlier this month, the US Court of Appeals for the Third Circuit sided with Kalshi in its dispute with New Jersey regulators, ruling that the CFTC has exclusive jurisdiction over sports-related event contracts.
That decision dealt a blow to state gaming regulators seeking to restrict event contract offerings and has become a central legal precedent in the broader regulatory debate.
Meanwhile, Coinbase expanded its prediction markets product nationwide in January, while Gemini entered the vertical in December through event contract trading tied to its broader financial services strategy.
The legal battle arrives as prediction markets continue drawing attention from both gambling regulators and major sports leagues.
National Basketball Association reportedly held discussions with Kalshi and Polymarket earlier this month, following similar partnerships involving the Major League Baseball and National Hockey League.
The outcome of the overlapping cases could determine whether prediction markets remain primarily regulated as financial products or face increasing oversight from state gaming authorities.
GGI reported on April 21 that New York sued Coinbase and Gemini while New Jersey regulators allowed their deadline to seek a rehearing against Kalshi to expire after a federal appeals court ruled in favor of the operator.
Kalshi remains blocked from offering sports event contracts in Nevada despite its federal court victory in New Jersey
