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The United States Commodity Futures Trading Commission and the Department of Justice have filed lawsuits against Illinois, Connecticut, and Arizona over the federal government\u2019s authority to regulate prediction markets.<\/p>\n
\n Summary<\/span>\n <\/p>\n <\/p>\n According to a complaint filed<\/a> against Illinois Governor JB Pritzker, Attorney General Kwame Raoul, and the Illinois Gaming Board, the state gaming board improperly classified event contracts as \u201cwagers\u201d or \u201csports betting\u201d instead of swaps.<\/p>\n In the lawsuits<\/a>, the CFTC maintains that it has \u201cexclusive jurisdiction\u201d to regulate \u201cDesignated Contract Markets (DCMs),\u201d which it says extend to prediction platforms under the Commodity Exchange Act (CEA).<\/p>\n Per the regulator, Illinois\u2019s move to shut down such platforms \u201cintrudes on the exclusive federal scheme Congress designed to oversee national swaps markets, prompted by the evolution of national financial markets and repeated conflicts with state law.\u201d<\/p>\n <\/p>\n \u201cUnless restrained and enjoined by the court, defendants are likely to continue their attempts to subvert federal law and the exclusive jurisdiction to regulate event contract swaps conferred on the CFTC by Congress,\u201d the lawsuit added.<\/p>\n The case stems from cease and desist letters<\/a> issued by the states and their gaming regulators last year against platforms including Kalshi and Polymarket. The letters claimed that the contracts violated local gambling laws and licensing requirements.<\/p>\n Commenting on the developments, CFTC Chairman Mike Selig described<\/a> the actions as \u201caggressive and overzealous attempts to overstep the CFTC,\u201d in a separate statement after the lawsuits were filed.<\/p>\n \u201cOur action today is meant to ensure we are able to effectively regulate the markets that Congress intended us to exclusively oversee,\u201d he added.<\/p>\n Over the past year, at least 11 U.S. states, including Arizona, Nevada, Illinois, Maryland, New Jersey, Montana, Ohio, Connecticut, Tennessee, New York, and Massachusetts, have filed actions against prediction market operators<\/a>.<\/p>\n Simultaneously, some lawmakers are advancing legislative proposals that would ban sports-related event contracts, while others seek to restrict participation in prediction markets tied to war.<\/p>\n Despite the legal pressure, prediction markets are witnessing rapid growth. As previously reported<\/a> by crypto.news, transaction activity surged, with volumes increasing by more than 2,800% from the same period last year.<\/p>\n <\/p><\/div>\n\n\n