Seriously though, this is something of a gray area:
"Yes, states can regulate areas already regulated by the federal government, provided the state regulation does not conflict with federal law. Under the Constitutionâ(TM)s Supremacy Clause, federal law takes precedence, but states often share concurrent powers (e.g., taxation) or set stricter standards than the federal minimum.
Key points on state vs. federal regulation:
1) Preemption: If a federal law conflicts with a state law, the federal law overrides (preempts) the state law.
2)Stricter State Standards: States can often impose stricter regulations, such as higher minimum wages, stricter environmental standards, or stricter gun laws, than federal regulations.
3) Areas of Sole Federal Authority: States generally cannot regulate areas designated strictly for the federal government, such as foreign policy, interstate commerce, or declaring war.
4) Dual Regulatory Systems: In many areas, such as banking or environmental protection, both state and federal agencies regulate simultaneously, with federal rules acting as a floor.
If a state law is deemed to conflict with federal law, the state law may be deemed unconstitutional or inapplicable. "
2) and 4) above may be the best bet (pun intended) for pushing the courts - NY may not be able to ban prediction markets, but may be able to tax them at the same rate (total coincidence!) as those that provide gambling. Also, NY may regulate prediction markets within the state to enforce a 21 year old minimum age to use them.
I could see one or both of those making it through. Outright banning, maybe not because of 1) above. I see 3) as being pretty hard to win by, for the fed that is, but I can see them trying that too.