The Commodity Futures Trading Commission (CFTC) has filed a preliminary injunction motion in New York District Court, attempting to prohibit Attorney General Letitia James from pursuing criminal or civil enforcement actions over the trading of sports event contracts.
The preliminary injunction request follows a lawsuit filed by the CFTC against the state of New York on April 25, arguing regulators overstepped their authority by pursuing legal action against crypto-linked prediction market operators.
The dispute stems from legal action filed by 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.
New York’s Attorney General is seeking a permanent injunction, an accounting, disgorgement, restitution and civil penalties against Coinbase Financial Markets and Gemini Titan, while also having filed a motion for a temporary restraining order and preliminary injunction.
Also on May 1, the CFTC concluded its 45-day public commentary period on proposed rulemaking centered around prediction markets, having received responses from the Coalition for Prediction Markets, NBA and Democratic lawmakers.
In a letter signed by multiple Democratic lawmakers, politicians requested the CFTC introduce heightened regulations to help prevent insider trading, as well as restrict events contracts on elections, military activity, government actions and sports.
The NBA declared prediction markets should be subject to “robust and comprehensive regulations” to protect the integrity of respective sports leagues and asked the CFTC to impose tighter restrictions on players, game officials and team staff.
The CFTC filed a federal lawsuit in the Eastern District of Wisconsin on April 28, seeking declaratory and injunctive relief against multiple regulators within the state
