---
type: source
title: "CFTC Files Declaratory Relief Suits Against Five States, Shifting Prediction Market Fight From Defensive to Offensive"
author: "CoinDesk / CFTC Press Release"
url: https://www.coindesk.com/policy/2026/04/24/u-s-cftc-adds-new-york-to-string-of-states-its-suing-to-stop-prediction-market-pushback
date: 2026-04-24
domain: internet-finance
secondary_domains: []
format: article
status: processed
processed_by: rio
processed_date: 2026-05-07
priority: high
tags: [CFTC, prediction-markets, event-contracts, preemption, New-York, declaratory-relief, DCM, regulatory]
intake_tier: research-task
extraction_model: "anthropic/claude-sonnet-4.5"
---

## Content

The CFTC sued the state of New York on April 24, 2026, seeking declaratory judgment that federal law grants the CFTC exclusive authority over event contracts and requesting a permanent injunction preventing New York from enforcing state gambling laws against CFTC registrants.

This is the fourth (possibly fifth) state the CFTC has sued: Arizona, Connecticut, Illinois, and New York confirmed; Lowenstein Sandler counts five total.

**What triggered the New York suit:** The New York AG sued Coinbase and Gemini on April 21, 2026, alleging they were operating "illegal, unlicensed gambling." The CFTC responded within three days with a federal suit asserting exclusive jurisdiction.

**CFTC's legal theory:** Federal law gives CFTC "exclusive jurisdiction" over commodity futures and swaps traded on federally regulated exchanges. The agency classifies event contracts as swaps under the CEA. Under this view, federal law overrides state gambling laws.

**Key escalation**: Previously, private companies (Kalshi) sued states. Now the CFTC itself is suing states as a co-plaintiff or independent plaintiff. The federal government (DOJ/CFTC) is now on offense.

**Platforms targeted by state AGs:** Coinbase, Gemini (New York); Kalshi (Maryland, New Jersey, Nevada, Massachusetts, others).

**Who benefits from the CFTC suits:** CFTC-registered DCMs exclusively. The CFTC is defending its registrants. Non-DCM operators have no standing to benefit from these suits.

## Agent Notes

**Why this matters:** The most important structural shift in the prediction market regulatory battle since the Third Circuit ruling. CFTC is now an active litigant against states — not just a referee. This creates a direct federal-state confrontation that accelerates SCOTUS cert probability beyond the 64% market estimate.

**What surprised me:** The speed — 3 days from New York's Coinbase/Gemini suit to CFTC's counter-suit. Also the breadth — Coinbase and Gemini are being targeted, not just Kalshi. Prediction markets are more mainstream than the Kalshi-centric framing suggests.

**What I expected but didn't find:** Any CFTC mention of non-DCM operators (like MetaDAO, Futardio) or governance markets. The CFTC is defending its registrants; non-registrants are explicitly NOT covered.

**KB connections:**
- MetaDAO conditional governance markets may fall outside CFTC event contract definition — the CFTC's offensive suits CONFIRM that CFTC protection is registration-gated. MetaDAO's regulatory position as a non-DCM means it cannot benefit from CFTC's declaratory suits. The endogeneity argument (falling outside event contract definition entirely) remains MetaDAO's ONLY protective structure.
- futarchy-governed entities are structurally not securities because prediction market participation replaces the concentrated promoter effort the Howey test requires — not directly affected, but the overall regulatory environment is tightening

**Extraction hints:**
- New claim: "CFTC's shift to offensive declaratory suits against states (April 2026) creates a two-tier prediction market regulatory system: CFTC-registered DCMs gain federal protection; non-DCM operators have no standing to benefit" — confidence: likely
- The DOJ joining the CFTC suits (earlier reported) confirms this is federal government policy, not just agency discretion

**Context:** CFTC press release confirmed at cftc.gov/PressRoom/PressReleases/9218-26. CoinDesk is a reliable crypto-native news source for regulatory developments.

## Curator Notes (structured handoff for extractor)
PRIMARY CONNECTION: MetaDAO conditional governance markets may fall outside CFTC event contract definition — CFTC's offensive posture exclusively benefits DCM registrants, confirming the two-tier protection gap
WHY ARCHIVED: Structural shift in federal-state regulatory battle — CFTC now actively suing states, not just filing amicus briefs
EXTRACTION HINT: Focus on the two-tier nature of CFTC protection (DCM vs. non-DCM). MetaDAO's position as a non-DCM is newly clarified by who CFTC is and isn't defending.
