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CFTC sues Kentucky over state enforcement of prediction-market laws

Regulation

The Commodity Futures Trading Commission has sued Kentucky, its governor, attorney general and gambling regulator over efforts to enforce state gambling laws against prediction markets. The CFTC seeks a court declaration that the challenged laws are pre-empted as applied to designated contract markets, and an injunction barring their enforcement in those circumstances.

The court’s decision could determine whether Kentucky may enforce gambling laws against designated contract markets.

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Regulation

Illinois federal judge limits state gambling enforcement against Kalshi

A federal judge in Illinois partially maintained preliminary injunctions protecting Kalshi from state gambling enforcement on 2 October. The court found that federal law likely preempts state licensing requirements because Kalshi’s contracts likely qualify as swaps. The ruling remains preliminary, and the judge allowed further briefing on wager-related fees.

A federal judge in Illinois ruled on 2 October that the state likely cannot enforce several of its gambling laws against Kalshi while a case on prediction markets continues, keeping preliminary injunctions in place in part. US District Judge Martha M. Pacold found that Kalshi's event contracts are likely swaps under the Commodity Exchange Act, according to the opinion. The decision is not final.

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