The U.S. Commodity Futures Trading Commission is pushing the federal and state jurisdiction dispute over predictive markets into a broader legal battlefield. On April 24, the CFTC, in conjunction with the U.S. Department of Justice, filed a lawsuit in the Southern District of New York Federal Court against New York Governor Kathy Hochul, Attorney General Letitia James, and members of the Gaming Commission, requesting the court to confirm the federal agency's exclusive jurisdiction over event contracts and issue a permanent injunction to prevent New York from continuing to enforce its state gambling laws against federally registered exchanges. Meanwhile, the CFTC has also submitted an amicus brief in Massachusetts, publicly supporting Kalshi against the state's previously issued preliminary injunction. With similar lawsuits already filed against Arizona, Connecticut, Illinois, and Wisconsin, the CFTC is weaving a federal jurisdiction protection network across the East and West coasts. CFTC Chairman Michael Selig reiterated in a statement that CFTC-registered exchanges are facing a wave of lawsuits from states attempting to limit Americans' access to event contracts and erode federal exclusive regulatory authority, with New York being the latest state attempting to enforce its state gambling laws on federal registered exchanges. He reiterated that overheated state governments will not be allowed to undermine the federal agency's long-term regulatory authority over these markets.
New York's top leaders jointly counterattack, federal exclusive jurisdiction versus state consumer protection
New York's response is equally strong. Hochul and James directly targeted the core logic of the federal government in a joint statement, pointing out that New York's gambling laws are designed to protect consumers, whether they are betting in predictive markets or casinos. When gambling platforms (including predictive markets) violate state laws, the state government will not hesitate to hold them accountable and expects to continue defending state laws in court. The direct conflict between New York State and predictive market platforms can be traced back to October 2025, when the New York Gaming Commission issued a cease and desist order to Kalshi, determining that its sports-related contracts constituted unlicensed illegal gambling. Kalshi subsequently filed its own lawsuit in federal court. Subsequently, New York State went further, filing legal lawsuits against Coinbase and Gemini to prevent them from participating in transactions linked to sports and election results, and is currently recovering substantial financial penalties.
The CFTC stated in the lawsuit that unless the court restrains and issues an injunction, the defendants are likely to continue trying to subvert federal law and the exclusive jurisdiction granted to the CFTC over event contract swaps. The defendants' aggressive enforcement of state laws superseded by federal law is causing irreparable harm to the federal plaintiffs, as it disrupts the operation of federally regulated markets and undermines the CFTC's ability to apply and enforce its own regulations and the Commodity Exchange Act.
Massachusetts' intervention and the national legal landscape
The CFTC's intervention in Massachusetts took a different path from New York. The state had previously issued a preliminary injunction supporting its position, which was unfavorable to Kalshi. The federal agency chose to submit a brief as a friend of the court, trying to strengthen its interpretation of the Commodity Exchange Act—that the law grants the federal agency exclusive regulatory authority over derivative markets (including prediction-based contracts). Massachusetts has recorded significant business volume in the regulated sports betting sector, with gross gaming revenue reaching $227.2 million in the first quarter of 2026, contributing $44.4 million in taxes. The state government is also exploring further expansion, having opened a new round of operator license application windows.
Selig warned in his statement that some states continue to launch escalating illegal enforcement actions against CFTC-regulated exchanges, despite multiple court rulings that have blocked these efforts. Congress has granted the CFTC the sole authority to regulate commodity derivative markets, including predictive markets. He reiterated that any state attempting to repeal federal law and seize regulatory authority over these markets will meet in court. From New York's cease and desist order to Wisconsin's civil lawsuit, from Arizona's criminal charges to Massachusetts' preliminary injunction, states are using various but unified legal tools to choke the predictive market, while the CFTC is systematically counterattacking with the constitutional shield of federal exclusive jurisdiction.
PASA official website continues to track the latest judicial developments in the U.S. predictive market federal and state jurisdiction dispute, noting that the CFTC's litigation strategy has evolved from initially countering individual states to a synchronized legal offensive covering multiple jurisdictions. The verdicts in the New York and Massachusetts cases, along with other similar cases currently under review, will provide the next batch of critical case law coordinates for this federalism contest.
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