Svmuu News The U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Department of Justice filed separate lawsuits on Thursday against the states of Illinois, Connecticut, and Arizona, along with their respective gaming regulatory bodies, in a bid to assert federal regulatory authority over prediction markets.
In 2025, the aforementioned three states and their gaming regulators issued cease-and-desist letters to prediction market platforms such as Kalshi and Polymarket, arguing that the event contracts offered by these platforms violated state gambling laws and licensing requirements. In all three lawsuits, the CFTC asserts that, under the Commodity Exchange Act, it holds exclusive jurisdiction over "designated contract markets," which include prediction market platforms. The lawsuit against Illinois specifically contends that the state's Gaming Board overstepped its authority by classifying event contracts as "wagering" or "sports betting."
CFTC Chairman Mike Selig stated that the states' overreach has created market uncertainty and poses potential risks to market participants and registered entities. Currently, 11 states have taken legal action against prediction market platforms. Concurrently, members of Congress are pushing for legislation to ban sports-related event contracts and restrict political insiders from participating in war-related prediction markets.