Federal government sues three states over prediction market regulation
The CFTC filed lawsuits against Arizona, Connecticut, and Illinois, asserting exclusive federal authority to regulate prediction markets under the Commodity Exchange Act.
8:39 PM
The Commodity Futures Trading Commission announced lawsuits Thursday against Arizona, Connecticut, and Illinois, asserting that the federal government holds exclusive authority to regulate prediction markets.
The CFTC said it was taking the three states to court over their actions against contract markets registered with the organization. According to the commission, Congress has granted the CFTC—rather than individual states—sole authority to regulate event contracts through the Commodity Exchange Act.
The commission said it found various states attempting to outlaw or hamper activities of designated contract markets operating in accordance with federal law. The CFTC described the state actions as inconsistent with federal regulatory authority.
The Trump administration filed the trio of legal actions, with officials arguing that the prediction market industry should be solely regulated by the federal government rather than by state gambling commissions. The lawsuits represent the furthest the Trump administration has gone in attempting to override state laws and establish federal rules for the fast-growing industry.
Multiple states have previously attempted to block prediction market companies, including Kalshi and Polymarket, from operating within their borders, citing state gambling laws. The prediction market industry has faced scrutiny over questions regarding insider trading and the practice of allowing users to profit from events involving war and human suffering.
Trump officials have voiced support for the prediction market industry for months prior to filing the lawsuits. The legal actions target states' efforts to restrict or regulate the operations of federally registered prediction market platforms.