The U.S. government has sued Arizona, Connecticut and Illinois in a bid to block their efforts to regulate prediction markets, arguing that such oversight falls exclusively under federal jurisdiction.
The lawsuits, filed under President Donald Trump’s administration, mark the first time the Commodity Futures Trading Commission (CFTC) has moved to stop state gaming regulators from policing operators offering so-called event contracts.
The federal government said attempts by the states to rein in platforms such as Kalshi, Polymarket, Crypto.com, and Robinhood violate the CFTC’s exclusive authority over national swaps markets.
Event contracts allow users to trade on the predicted outcomes of events, including sports and elections.
In complaints filed against the states, the U.S. said Connecticut and Illinois “misapprehend” the nature of such contracts, and argued that allowing states to regulate them would violate the U.S. Constitution.
“This court should put an end to the ongoing efforts by defendants to undermine the uniform application of federal law,” the government said.
The cases follow cease-and-desist orders issued by state regulators to designated contract markets, as well as futures commission merchants, after authorities said the platforms enabled unlicensed sports wagering.
Arizona has gone further, filing criminal charges against Kalshi in March, accusing it of facilitating illegal gambling and allowing bets on elections.
CFTC Chairman Michael Selig said the agency would defend its jurisdiction.
The CFTC “will continue to safeguard its exclusive regulatory authority over these markets and defend market participants against overzealous state regulators,” Selig said.
The defendants include the states’ respective governors and attorneys general: Katie Hobbs and Kris Mayes in Arizona, Ned Lamont and William Tong in Connecticut, and JB Pritzker and Kwame Raoul in Illinois.
State officials pushed back strongly against the federal action, framing their efforts as consumer protection.
William Tong said: “The Trump Administration is recycling industry arguments that have been rejected in district courts across the country,” adding, “We will aggressively defend Connecticut’s commonsense consumer protection laws.”
A spokesperson for Pritzker accused the administration of “carrying water” for prediction market companies that put profits first, while exposing Illinoisans to gaming products with no basic consumer protections or oversight.”
While the CFTC views them as financial instruments subject to federal oversight, many states and tribal gaming regulators argue they resemble gambling products that should be governed by state law, particularly amid concerns about underage betting and lack of safeguards.
Original article: https://www.yogonet.com/international/news/2026/04/06/118414-us-sues-three-states-over-prediction-market-regulation-citing-federal-authority
