New York City Council announces probe into prediction market platforms’ marketing strategies
In letters to four prediction market platforms, City Council Speaker Julie Menin said the council was also actively considering legislation to address concerns.
The U.S. Commodity Futures Trading Commission (CFTC) has mandated the prediction market company Kalshi to continue operating in New York, despite the state's legal efforts to shut down the platform. This decision came after New York Attorney General Letitia James filed a lawsuit against Kalshi at the end of July. The federal regulator's action is the latest in a series of conflicts between the CFTC and state regulators regarding prediction markets.
While states argue that these markets, particularly sports-related ones, are gambling platforms in violation of state regulations, the CFTC maintains that it has authority over all prediction markets due to their federally regulated nature as swaps. CFTC Chairman Mike Selig emphasized that Congress did not intend for derivatives exchanges to be governed by disparate state gaming laws.
New York plans to impede event contract derivatives within its jurisdiction before the courts can deliver final judgments, Selig stated. The CFTC had previously contested New York's approach to prediction markets. New York had initiated legal proceedings against Kalshi on July 31 following a federal judge's ruling against Kalshi's attempt to prevent the state from filing a lawsuit.
The state alleged that Kalshi was breaching its gambling laws by offering sports prediction markets. Kalshi failed to secure a license from the New York State Gaming Commission, thus avoiding taxation obligations similar to those required of licensed casinos and mobile sports gambling platforms. The state argued that the revenue from gambling regulation supports public schools, youth sports programs, and problem gambling education and treatment.
Kalshi attempted to transfer the case to federal court, while New York sought to transfer it back. These motions are presently awaiting a judge's decision. Earlier, the CFTC intervened to aid Kalshi in continuing operations in Michigan following a court ruling in favor of the state. However, Kalshi's Head of Enforcement, Robert Denault, announced on social media that the company had already "unwound the trades" mandated by the Michigan court.
Written by urgent.news from CoinDesk's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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