The American Gaming Association is opposing the Commodity Futures Trading Commission’s request to block New York enforcement against federally regulated prediction markets.
The dispute turns on whether federally regulated sports-event contracts fall exclusively within the CFTC’s jurisdiction or may also be regulated by states as gambling products. DeFi Rate is tracking the case in its lawsuit database.
New York and the AGA argue that allowing sports-event contracts outside the state’s gambling regime would undermine its licensing, consumer-protection and tax system. The CFTC argues that Congress gave it exclusive authority over qualifying contracts traded on federally regulated exchanges, leaving states without jurisdiction to apply their gambling laws to those markets.
The AGA set out its position in a Sept. 7 memorandum. Judge Lorna G. Schofield permitted the group to file the brief without deciding its request to intervene. The court has not ruled on the CFTC’s preliminary-injunction motion.
AGA calls sports contracts sports betting
The AGA argues that a contract on whether a team wins, covers a point spread or finishes above a scoring total is a sports bet in substance, even when it trades on a federally registered exchange.
The brief points to the Ninth Circuit’s Aug. 28 decision in KalshiEX LLC v. Assad, which the AGA says supports New York’s authority to regulate sports contracts as gambling. It also cites Kalshi advertising, product comparisons and reporting on Kalshi’s sports volume to argue that the economic product resembles a sportsbook wager more than a conventional financial hedge.
The AGA also accused prediction exchanges of competing on uneven terms. State-licensed sportsbooks pay taxes and follow New York rules covering licensing, age limits, responsible-gaming controls and market restrictions. Prediction exchanges can offer similar sports outcomes without operating under that state system, the group argued.
The filing says New York mobile sports betting generated about $1.32 billion in state tax revenue in 2025, with most of the money directed to education. The court has not adopted that estimate.
CFTC suit covers Kalshi, Coinbase and Gemini
The United States and CFTC sued New York on April 24 after the state’s gaming commission ordered Kalshi to stop offering sports-event contracts without a state license. New York Attorney General Letitia James had also filed state enforcement actions against Coinbase Financial Markets and Gemini Titan.
The federal complaint argues that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over swaps and futures traded on federally regulated exchanges. On that theory, New York cannot apply gambling laws in a way that controls which event contracts those exchanges may offer.
Both New York and the AGA reject that reading. Their position is that federal registration does not erase the state’s traditional authority over gambling, particularly if the products mirror point spreads, moneylines, totals and other familiar sportsbook markets.
Federal courts have split over the issue. The Third Circuit gave Kalshi preliminary protection against New Jersey enforcement, while the Ninth Circuit ruled against Kalshi in Nevada. A separate Southern District of New York judge also denied Kalshi’s injunction request against New York regulators in July.
Monday hearing could test the federal shield
Schofield is scheduled to hear arguments on the federal plaintiffs’ preliminary-injunction motion at 11 a.m. ET on Sept. 14 in the Southern District of New York, according to the court’s Aug. 10 order.
The ruling will address temporary relief while the lawsuit continues, not finally resolve whether sports-event contracts are swaps or whether the CFTC’s authority preempts New York gambling law. A decision for the federal plaintiffs could restrain New York enforcement during the case. A denial would leave the federal government without that requested shield while the underlying claims remain pending.
The court’s next order will determine whether New York may continue the challenged enforcement actions while the federal case moves forward.
