Court Clash Erupts in the U.S. Between Washington and States Over Prediction Markets

^{Pictured: Michael Selig, Chairman of the U.S. Commodity Futures Trading Commission}

The administration of U.S. President Donald Trump has filed lawsuits against the states of Arizona, Connecticut, and Illinois, challenging their efforts to restrict the operation of prediction market platforms, Reuters reported.

Federal authorities argue that platforms such as Polymarket and Kalshi should be classified not as gambling services but as financial instruments. As such, they should fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC), rather than state authorities.

Several states, however, take the opposite view. Local regulators say these platforms effectively offer unlicensed betting, including on sports, and therefore fall under state gambling laws. On that basis, they have issued cease-and-desist orders.

In Arizona, the situation has escalated further, with authorities initiating criminal proceedings against Kalshi, accusing the platform of organizing illegal gambling.

The federal government maintains that such actions by states violate the law and interfere with an area regulated at the federal level.

CFTC Chairman Michael Selig said states should not interfere in the operation of prediction platforms, as this falls within the regulator’s remit, which it will defend.

The lawsuits name as defendants the governors and attorneys general of the three states, as well as local gambling regulators. All three governors are Democrats, while Trump is a Republican.

State officials, in turn, have rejected the federal position. William Tong, Connecticut’s attorney general, said the state would defend existing consumer protection rules. Officials in Illinois also criticized the lawsuits, saying federal authorities were effectively supporting prediction platforms while ignoring risks to users.

Earlier, Gambling Park reported that research shows prediction platforms are increasingly becoming an alternative to traditional bookmakers in the United States.