On Thursday, the Justice Department and the Commodity Futures Trading Commission (CFTC) filed lawsuits against Illinois, Arizona, and Connecticut in a significant move to support prediction markets amid an ongoing jurisdictional conflict. The Trump administration claims that the CFTC has sole authority over regulating sports-related wagers on platforms like Polymarket and Kalshi.
Over the past year, several states have taken legal action against these platforms, arguing that sports-themed prediction markets are not covered by the CFTC’s regulatory scope but constitute unregulated sports betting instead. The @CFTC asserts its longstanding exclusive jurisdiction over prediction markets, countering recent attempts by state regulators to enforce conflicting and inconsistent obligations on CFTC-registered markets. Consequently, today’s lawsuits were filed by the CFTC and the Justice Department.
By targeting Illinois, Arizona, and Connecticut—three states that have pursued legal action against these platforms—the Trump administration is making a decisive effort to liberate this emerging sector from state gambling laws. “The CFTC will persist in protecting its exclusive regulatory authority over these markets and defend market participants against overly aggressive state regulators,” stated CFTC Chairman Michael Selig. He emphasized that Congress rejected a fragmented system of state regulations due to the potential for reduced consumer protection, heightened fraud risk, and manipulation.
In their legal filings, the DOJ and CFTC argue that the cease-and-desist letters issued last year by these states to platforms such as Polymarket, Kalshi, and Crypto.com contravened federal law granting the CFTC exclusive regulatory power over event contracts. The complaint against Illinois, filed in the U.S. District Court for the Northern District of Illinois, seeks to halt efforts that undermine uniform federal law application.
In recent weeks, state regulators have achieved early victories against prediction markets. For instance, Nevada temporarily banned a platform as its lawsuit against Kalshi proceeds to trial. Additional lawsuits may follow since other states have similarly issued cease-and-desist orders for sports-related wagers on these platforms.
The Trump administration’s decision to first challenge Illinois and Connecticut targets two Democratic-led states. Notably, Illinois Governor J.B. Pritzker, criticized by President Trump as “a big fat slob,” was named in the lawsuit against his state. Although Arizona supported Trump in 2024, it is currently governed by Democrats and has become the first state to file criminal charges against Kalshi for allegedly running an illegal gambling business without a license.
The issue of prediction market regulation transcends partisan lines, with several Republican-led states also pursuing legal action against Polymarket and Kalshi. Utah, which supported Trump significantly in 2024, has emerged as one of the sector’s most vocal critics.
Under the Trump administration, there is a notably supportive stance towards prediction markets. The president’s media company pursues similar ventures, while his son, Donald Trump Jr., advises Polymarket and Kalshi. Additionally, Yaakov Roth, who represents the federal government in its case against Illinois, previously represented Kalshi in a landmark victory over the CFTC in 2024.