Coinbase has sued the attorneys general of Michigan, Illinois and Connecticut, arguing that state regulators lack authority over prediction markets. The company is seeking court orders affirming the CFTC's exclusive jurisdiction, as it prepares to enter the market through an integration with Kalshi.
The lawsuits could affect whether operators in these states face state gambling oversight or federal commodities regulation.
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The CFTC has filed lawsuits against several states seeking to prevent state-level control of prediction markets, according to the report. State officials argue the platforms offer gambling and should fall under state gambling commissions; the report says at least 11 states have recently pursued legal or regulatory action.
Representatives from 20 Oklahoma tribal nations raised concerns about prediction markets’ reach and their implications for tribal gaming authority. Oklahoma Indian Gaming Association chairman Matthew Morgan argued that the platforms’ products resemble gambling, while the industry maintains that they fall under Commodity Futures Trading Commission oversight rather than state gaming regulators.
Minnesota state authorities argued in a court filing that the CFTC cannot regulate prediction markets covering sports, politics and other events. The filing contends that federal law does not override state authority and that Kalshi and Polymarket should be barred from offering these markets to Minnesota residents. It also alleges that President Donald Trump’s stance on the sector may benefit his business interests.
President Donald Trump said the Commodity Futures Trading Commission should have sole authority over prediction markets and that state regulators should not interfere, according to reports. The coverage also says Minnesota enacted a law intended to block prediction-market operators, while federal authorities responded with legal action asserting federal authority. Kalshi and Polymarket maintain that they operate as federally regulated exchanges, not gambling businesses.
Amanda Fischer, policy director and chief operating officer at Better Markets, said Congress did not intend the CFTC to oversee sports-related event contracts under the 2010 Dodd-Frank law. She also argued that the agency lacks the resources to supervise prediction markets effectively and questioned Polymarket’s compliance with controls required by a 2022 settlement.