Regulations
By James Thorp
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What the CFTC Actually Wants. The commission's lawsuit doesn't mince words. It claims exclusive jurisdiction over event-based…
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Why Crypto Cares About This Fight. Prediction markets aren't always crypto-native. But a lot of them are. Polymarket runs on Polygon.
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What Happens If States Win. A loss for the CFTC would be messy. Prediction markets would probably fragment.
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The feds just sued New York. Not over taxes or securities. Over who gets to say whether prediction markets count as gambling.
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The Commodity Futures Trading Commission filed papers in federal court to stop New York from enforcing its gambling statutes against prediction platforms.
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The commission's lawsuit doesn't mince words. It claims exclusive jurisdiction over event-based contracts. That's the category covering most prediction market activity.
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The state's gambling regulators started sending letters to prediction platforms operating within its borders.
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If New York wins, other states will probably follow. California could decide prediction markets violate its gambling laws. Texas might do the same.
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But if the CFTC wins, prediction markets get a clearer path. One set of federal rules. One regulator to deal with.
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See also: CFTC Sues New York Over Prediction Market Crackdown
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The lawsuit also touches on a bigger question. Who regulates crypto derivatives? The CFTC and SEC have been arguing about that for years. Bitcoin futures?
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Platforms didn't ask for this fight. They just wanted to operate. Kalshi spent years getting CFTC approval for certain contracts. Polymarket tried to stay compliant by blocking U.
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A loss for the CFTC would be messy. Prediction markets would probably fragment. Platforms might create separate entities for each state, the way sports betting operators do.
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There's also a chance some platforms just give up on the U.S. market. Polymarket already blocks Americans. If the legal environment gets worse, others might follow.
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The case might take months. Maybe longer. Courts don't move fast. And both sides have good lawyers. The CFTC has the resources of the federal government.
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