CFTC sues states to assert exclusive jurisdiction over prediction markets

The Commodity Futures Trading Commission (CFTC) filed lawsuits against Arizona, Connecticut, and Illinois last week over the jurisdiction of prediction markets, which have gained popularity in the past year. The states say the markets are illegal gambling, but the CFTC says it has sole authority over regulating the companies. 

Prediction markets such as Polymarket and Kalshi are financial exchanges that allow users to buy and sell contracts tied to future events. This includes elections, economic reports, sports results, and even military operations. While these markets function like futures markets, they sit in a gray area, as they’re not gambling like at a casino, but they’re also not a market for goods.