The U.S. Commodity Futures Trading Commission has filed lawsuits against Illinois, Arizona and Connecticut over their attempts to shut down sports-related prediction market platforms.
The regulator argues that these products qualify as swaps under the Commodity Exchange Act, placing them under federal jurisdiction rather than state gambling laws.
“Event contracts are derivative instruments that enable parties to trade on their predictions about whether a future event… will occur,”
The CFTC said in its filing.
The lawsuits follow cease-and-desist orders issued by several states, which claim prediction markets are effectively sports betting and should be regulated locally.
The dispute reflects a broader legal battle over whether prediction markets fall under financial regulation or gambling frameworks.
State officials, including Illinois Governor J.B. Pritzker’s office, have criticised the federal move, arguing it weakens consumer protections and allows companies to bypass oversight.
The outcome could shape how prediction markets, including those linked to crypto platforms, are regulated across the U.S., with implications for both financial and betting industries.