- The CFTC and DOJ jointly sued Illinois, Arizona, and Connecticut on April 2 to block state cease-and-desist orders against federally regulated prediction market platforms including Kalshi, Polymarket, and Robinhood.
- CFTC Chairman Mike Selig cited exclusive jurisdiction under the Commodity Exchange Act, asserting that state regulators were attempting to “subvert federal law” by classifying event contracts as gambling requiring state licences.
- The federal suits mark the first direct court challenge to state prediction market enforcement, as 11 states pursue legal action against platforms and Congress separately debates bans on political insider wagering.
Federal regulators escalated a legal conflict over prediction markets this Thursday, as the Commodity Futures Trading Commission (CFTC) and Department of Justice filed lawsuits against Illinois, Arizona, and Connecticut to block state-level enforcement actions against federally regulated platforms including Kalshi, Polymarket, and Robinhood.
The filings argue that the CFTC has exclusive authority over Designated Contract Markets under the Commodity Exchange Act of 1974.
The agency is seeking court orders to stop states from restricting platforms it regulates, warning that continued enforcement would interfere with federal law and market stability.
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It’s a lot of Lawsuits
The Illinois case names Governor JB Pritzker, Attorney General Kwame Raoul, and members of the Illinois Gaming Board.
The state issued cease-and-desist orders in April 2025 against Kalshi, Robinhood, and Crypto.com, classifying event-based contracts as gambling products requiring state licences. A separate order targeted Polymarket in early 2026. The CFTC argues these actions prevent federally approved exchanges from operating.
Arizona and Connecticut face similar lawsuits tied to their own enforcement measures. In total, 11 states are pursuing action against prediction market platforms, creating overlapping legal challenges across jurisdictions.
Congress is also considering new restrictions on prediction markets, including limits on sports-related contracts and bans on trading by political insiders on war-related events. These proposals could reshape the sector regardless of how courts resolve the federal-state dispute.
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