The Commodity Futures Trading Commission (CFTC) has filed
lawsuits against Arizona, Connecticut, and Illinois, accusing them of
interfering in markets under federal jurisdiction. The regulator claims the
states acted unlawfully by attempting to restrict or regulate designated
contract markets (DCMs) that operate under CFTC approval.
Singapore Summit: Meet the largest APAC brokers you know (and those you still don't!)
Federal Jurisdiction Dispute
According to the CFTC
CFTC
The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss
The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss
Read this Term, the Commodity Exchange Act (CEA)
grants it exclusive authority to oversee event contracts, which allow trading
based on outcomes such as elections or company performance. The lawsuits aim to
reaffirm that state regulators have no power to impose separate rules or bans
on such activities.
“The CFTC will continue to safeguard its exclusive
regulatory authority over these markets and defend market participants against
overzealous state regulators,” said Chairman Michael S. Selig. He added that
Congress rejected fragmented state oversight to prevent inconsistent standards
and greater risk of fraud.
The new lawsuits extend a campaign that CFTC Chair Michael Selig started earlier this year to defend prediction markets from state-level challenges. In February, he said the agency had filed an amicus brief in ongoing cases and warned that state regulators “will see” the CFTC in court as it seeks to assert what he calls its exclusive jurisdiction over event contracts.
I have some big news to announce… pic.twitter.com/3OBNTaOnIL
— Mike Selig (@ChairmanSelig) February 17, 2026
Clarifying the Regulatory Framework
The commission recently issued an Advanced Notice of
Proposed Rulemaking to address confusion surrounding the application of federal
rules to prediction markets. The CFTC officially recognized event contracts in
1992 through the Iowa Electronic Markets and gained expanded authority after
the 2008 financial crisis.
The legal actions seek to reinforce a unified federal
approach and protect market operators from conflicting state regulations that
could disrupt the growing prediction market sector.
Selig’s position marks a shift from the agency’s earlier attempts to shut down political and event‑based markets run by platforms such as Polymarket and Kalshi.
Courts pushed back against parts of that crackdown, and after Donald Trump returned to the White House and replaced the CFTC’s leadership, the commission dropped those cases and withdrew a proposal that would have imposed broad restrictions on political and sports prediction markets.
A key CFTC official said the agency will use its powers to root out insider trading in prediction markets https://t.co/UillsoQ2f2
— Bloomberg (@business) April 1, 2026
The CFTC has also clarified that prediction market contracts fall under derivatives rules, not gambling laws, and that insider trading regulations fully apply. In his first public comments as Enforcement Director, David Miller said it is “wrong” to assume insider trading does not apply to these markets, stressing that firms must treat event-based trading like any other financial product when it comes to the use of non-public information.
The Commodity Futures Trading Commission (CFTC) has filed
lawsuits against Arizona, Connecticut, and Illinois, accusing them of
interfering in markets under federal jurisdiction. The regulator claims the
states acted unlawfully by attempting to restrict or regulate designated
contract markets (DCMs) that operate under CFTC approval.
Singapore Summit: Meet the largest APAC brokers you know (and those you still don't!)
Federal Jurisdiction Dispute
According to the CFTC
CFTC
The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss
The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss
Read this Term, the Commodity Exchange Act (CEA)
grants it exclusive authority to oversee event contracts, which allow trading
based on outcomes such as elections or company performance. The lawsuits aim to
reaffirm that state regulators have no power to impose separate rules or bans
on such activities.
“The CFTC will continue to safeguard its exclusive
regulatory authority over these markets and defend market participants against
overzealous state regulators,” said Chairman Michael S. Selig. He added that
Congress rejected fragmented state oversight to prevent inconsistent standards
and greater risk of fraud.
The new lawsuits extend a campaign that CFTC Chair Michael Selig started earlier this year to defend prediction markets from state-level challenges. In February, he said the agency had filed an amicus brief in ongoing cases and warned that state regulators “will see” the CFTC in court as it seeks to assert what he calls its exclusive jurisdiction over event contracts.
I have some big news to announce… pic.twitter.com/3OBNTaOnIL
— Mike Selig (@ChairmanSelig) February 17, 2026
Clarifying the Regulatory Framework
The commission recently issued an Advanced Notice of
Proposed Rulemaking to address confusion surrounding the application of federal
rules to prediction markets. The CFTC officially recognized event contracts in
1992 through the Iowa Electronic Markets and gained expanded authority after
the 2008 financial crisis.
The legal actions seek to reinforce a unified federal
approach and protect market operators from conflicting state regulations that
could disrupt the growing prediction market sector.
Selig’s position marks a shift from the agency’s earlier attempts to shut down political and event‑based markets run by platforms such as Polymarket and Kalshi.
Courts pushed back against parts of that crackdown, and after Donald Trump returned to the White House and replaced the CFTC’s leadership, the commission dropped those cases and withdrew a proposal that would have imposed broad restrictions on political and sports prediction markets.
A key CFTC official said the agency will use its powers to root out insider trading in prediction markets https://t.co/UillsoQ2f2
— Bloomberg (@business) April 1, 2026
The CFTC has also clarified that prediction market contracts fall under derivatives rules, not gambling laws, and that insider trading regulations fully apply. In his first public comments as Enforcement Director, David Miller said it is “wrong” to assume insider trading does not apply to these markets, stressing that firms must treat event-based trading like any other financial product when it comes to the use of non-public information.
