The US Commodity Futures Trading Commission, in conjunction with the Department of Justice, has filed a lawsuit against Illinois, Arizona, and Connecticut, along with various state officials, over their attempts to close down prediction market providers. The states in question, including Illinois, had issued cease-and-desist letters to certain prediction market companies, asserting that these firms were offering sports betting products that should be subject to state regulations.
However, the CFTC maintains that prediction markets are offering swap products, which fall under the federal Commodity Exchange Act and thus are under the CFTC's exclusive jurisdiction. The lawsuit reiterates this stance, stating that Illinois's actions are encroaching upon the CFTC's role and that federal law supersedes state regulations in this matter. According to the filing, event contracts are financial instruments that enable parties to trade based on their predictions regarding future events, which may encompass economics, elections, climate, sports, or other financially significant occurrences.
A spokesperson for Illinois Governor J.B. Pritzker responded, saying, "The current administration is prioritizing the interests of companies involved in lucrative insider trading schemes over consumer protection. These firms are generating substantial profits while exposing Illinois residents to gaming products lacking basic consumer safeguards and oversight.
This is a clear attempt to circumvent the state's authority and prioritize profits over consumers. Illinois will not back down and will continue to fight for the protection of its consumers." Under the leadership of Chairman Mike Selig, the CFTC has consistently argued that prediction markets are subject to federal regulations, even as these companies expand their offerings to include sports betting. However, states, regardless of their political affiliations, have pushed back against this stance.
Recently, the Nevada Gaming Control Board obtained a temporary restraining order against Kalshi, with a hearing scheduled for this month. Selig stated, "This is not the first instance of states attempting to impose conflicting obligations on market participants. Congress has specifically rejected such a fragmented approach to state regulations, recognizing that it leads to inadequate consumer protection and increased risks of fraud and manipulation." The CFTC is set to participate in an appeals court hearing before the Ninth Circuit later this month, in a consolidated case involving the North American Derivatives Exchange, Kalshi, and Robinhood. For more information, read: Prediction Markets Backlash May Signal a Looming Storm for 2027.
UPDATE (April 2, 2026, 17:42 UTC): This article has been updated to include information about Arizona and Connecticut, as well as a statement from Selig. UPDATE (April 2, 2026, 22:33 UTC): This article has been updated to include a statement from Illinois.