The Commodity Futures Trading Commission sued Arizona, Illinois, and Connecticut on Thursday, escalating the Trump administration’s defense of prediction markets and arguing that the federal agency has exclusive authority over contracts offered by platforms such as Kalshi, according to The Wall Street Journal.
In civil complaints filed in federal courts in the three states, the CFTC asked judges to block state officials from enforcing gambling laws against the contracts, the Journal reported. The agency contends that the offerings are federally regulated financial instruments rather than wagers subject to state gambling oversight.
The cases mark the latest phase in a widening conflict between state regulators and prediction-market platforms, which allow users to trade on outcomes ranging from sports events to geopolitical developments. Several states have issued cease-and-desist orders, saying such operations violate state gambling laws, the Journal reported.
Prediction markets have expanded rapidly since President Trump’s 2024 re-election, with sports-related contracts drawing particular demand, the newspaper said. The Trump family has also taken a financial interest in the sector, with one of Trump’s sons serving as an adviser to both Kalshi and rival platform Polymarket.
The CFTC, which oversees derivatives markets tied to commodities such as oil and corn, has maintained that Kalshi and similar companies operate as CFTC-registered exchanges and offer trades in the form of swaps, the Journal reported. Those platforms have moved into sports-related contracts, setting up a legal clash with states that see the products as indistinguishable from online betting.
CFTC Chair Michael Selig, appointed by Trump last year, said in February that he had directed the agency to support Crypto.com’s prediction-market platform in its fight against a Nevada ban, the Journal noted.
Last month, Arizona’s attorney general filed criminal charges against Kalshi’s parent company, accusing it of operating an illegal gambling business without a license. Nevada previously forced Kalshi to temporarily halt new sports bets in the state, marking the first time the company had pulled back under regulatory pressure, according to the report.
Read more at The Wall Street Journal