The Federal Government Once Tried To Restrict Prediction Markets. Now It's Suing States To Save Them.
The Commodity Futures Trading Commission (CFTC) is suing six states to protect prediction markets like Kalshi, asserting federal exclusive jurisdiction over these platforms under the Commodity Exchange Act. This marks a shift from the federal government's earlier efforts to restrict such markets, including a 2023 attempt to block political event contracts. Courts have consistently ruled in favor of prediction markets, stating they operate as financial derivatives, not illegal gambling, and are shielded from state-level bans.
- ▪The CFTC is suing Wisconsin, Arizona, Connecticut, Illinois, New Jersey, and Massachusetts for interfering with federally regulated prediction markets.
- ▪In 2023, the CFTC blocked Kalshi from offering political event contracts, but courts later ruled these contracts are legal and not gambling.
- ▪Federal courts have affirmed that the Commodity Exchange Act preempts state laws from regulating event contracts that don't involve illegal acts or harm public interest.
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Online Gambling The Federal Government Once Tried To Restrict Prediction Markets. Now It's Suing States To Save Them. In a bid to “reaffirm its exclusive jurisdiction” over prediction markets such as Kalshi, the Commodity Futures Trading Commission is suing six states for interfering in federally regulated financial markets. Tosin Akintola | 5.1.2026 1:15 PM Share on FacebookShare on XShare on RedditShare by emailPrint friendly versionCopy page URL Add Reason to Google Media Contact & Reprint Requests <img src="https://d2eehagpk5cl65.cloudfront.net/img/c800x450-w800-q80/uploads/2026/05/prediction-federal-elections-800x450.jpg" style="max-width: 100%; height: auto" width="1200" height="675" title="Betting market graph and the U.S.
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