Federal government sues three states over their regulation of prediction markets

The federal government on Thursday sued Connecticut, Arizona and Illinois, challenging their efforts to regulate prediction market operators such as Kalshi and Polymarket.

All three states have sent cease and desist orders to such companies accusing them of engaging in illegal online gambling under state law. Arizona also filed criminal charges last month against Kalshi for allegedly violating state gambling laws and a law that makes betting on elections illegal.

The Commodity Futures Trading Commission contends in court filings that it, not the states, regulates these companies.

“The CFTC will continue to safeguard its exclusive regulatory authority over these markets and defend market participants against overzealous state regulators,” CFTC Chairman Michael S. Selig said in a written statement. He said Congress “rejected such a fragmented patchwork of state regulations” because it led to increased risk of fraud and poor consumer protection.

Last month, the Trump administration threw its support behind the operators Kalshi and Polymarket in a critical legal battle that could have implications for how sports betting is regulated.

                        Related Stories
                    
                

        
    
    
    
    







    
        

                
                    



    
        


  




    




    




    




    




    




    




    




    



    




    
    
    
    

    

    





    
        

            
            
            Prediction markets challenge tribal casinos’ hard-won place in US gambling
        

    

  

    

    
    







    
    
        
        
    
    
    
    
        

            4 MIN READ
        

    
    
    
    







    

    

    

    

    




                
            

    
        

                
                    



    
        


  




    




    




    




    




    




    




    




    



    




    
    
    
    

    

    





    
        

            
            
            Sports betting roundup: Michigan leads the way into college basketball’s Final Four
        

    

  

    

    
    







    
    
        
        
    
    
    
    
        

            1 MIN READ
        

    
    
    
    







    

    

    

    

    




                
            

    
        

                
                    



    
        


  




    




    




    




    




    




    




    




    



    




    
    
    
    

    

    





    
        

            
            
            DraftKings says it has used ‘March Madness,’ other terms for 5 years in response to NCAA complaint
        

    

  

    

    
    







    
    
        
        
    
    
    
    
        

            1 MIN READ

Connecticut Attorney General William Tong on Thursday accused the Trump administration of “recycling industry arguments” that have been rejected in district courts across the country.

“These contracts are plainly unlicensed illegal gambling under time-worn state law, and we will aggressively defend Connecticut’s commonsense consumer protection laws,” he said.