CFTC sues states over prediction market clash

The Commodity Futures Trading Commission has filed for an emergency injunction to stop Arizona from enforcing gambling laws against prediction market platform Kalshi.

The move escalates a broader legal battle, with the CFTC suing Arizona, Connecticut and Illinois in what marks the first time in its 50-year history that the agency has taken action against US states.

“The agency won’t stand for intimidation by states seeking to nullify federal law,”

Said CFTC Chair Michael Selig.

The regulator argues prediction markets fall under federal jurisdiction via the Commodity Exchange Act, while states claim the platforms amount to unlicensed gambling.

The case has drawn scrutiny due to links between the platforms and Donald Trump Jr., who advises both Kalshi and Polymarket and whose firm has invested in the sector.

Additional ties include partnerships involving Crypto.com and Robinhood, both of which have received cease-and-desist orders from states now being sued.

A key hearing in the Ninth Circuit on April 16 could determine whether prediction markets operate under unified federal rules or face fragmented state-level regulation.