Doubling Down: CFTC Sues New York and Files Amicus in Massachusetts in Support of Prediction Markets

The Commodity Futures Trading Commission (CFTC) continues to defend its jurisdictional turf. The CFTC filed a federal lawsuit against the State of New York and submitted an amicus brief to the Massachusetts Supreme Judicial Court as part of the CFTC's broader campaign to prevent what it characterizes as unlawful state encroachment into federally regulated commodity derivatives markets and reasserting its exclusive federal authority over prediction markets. The April 24 filings left no doubt that the CFTC will continue to play an aggressive role in the litigation and policymaking unfolding across the nation related to prediction markets. Chairman Michael S. Selig also had a message for states considering taking legal action against prediction market exchanges and participants: “To any state that seeks to nullify federal law and seize authority over these markets, I say again: we will see you in court.”

The New York Lawsuit

In New York, the CFTC, together with the United States Department of Justice (DOJ), filed a civil complaint in the US District Court for the Southern District of New York against the State of New York and its leaders seeking a declaratory judgment that federal law grants the CFTC exclusive authority to regulate event contracts and a permanent injunction preventing the state from enforcing preempted state gambling and wagering laws against CFTC-registered entities. The complaint was prompted by a series of state enforcement actions, including an October 2025 cease-and-desist letter to KalshiEX LLC and two civil enforcement actions against Coinbase Financial Markets, Inc. and Gemini Titan, LLC — two entities that offer event contracts on CFTC-regulated national markets — alleging violations of New York gaming laws. 

The Massachusetts Amicus Brief

The CFTC also filed an amicus brief in the Massachusetts Supreme Judicial Court in Commonwealth of Massachusetts v. KalshiEx LLC, No. SJC-13906, supporting Kalshi and advancing three critical arguments it has advanced in other prediction markets related litigation: (1) that event contracts, including sports event contracts, qualify as “swaps” under the plain language of the Commodity Exchange Act (CEA); (2) that the CEA preempts state gambling laws as applied to swaps traded on CFTC-regulated designated contract markets (DCMs) on the grounds of express, field and conflict preemption; and (3) that permitting states to regulate event contracts listed on DCMs would result in destabilizing consequences that would threaten the regulatory foundation for all prediction markets, including ones tied to non-sports outcomes involving cryptocurrency prices, GDP releases, interest-rate decisions, election outcomes, and weather forecasts.

Looking Ahead

The New York and Massachusetts actions follow similar CFTC lawsuits filed against Arizona, Connecticut, and Illinois, as well as an amicus filing before the US Court of Appeals for the Ninth Circuit. The nationwide litigation over whether the CFTC has exclusive jurisdiction over prediction markets shows no signs of abating and appears destined for consideration by the US Supreme Court. However, in the meantime, the CFTC seems determined to aggressively defend its exclusive regulatory authority over event contract markets, as Chairman Selig noted: “The CFTC will not allow overzealous state governments to undermine the agency’s longstanding authority over these markets.”

Katten on Prediction Markets and CFTC Enforcement

Katten is continually monitoring the latest developments regarding prediction markets. For more information, visit our Prediction Markets topic, or please contact one of the authors of this article or your primary Katten attorney.