The federal agency that regulates prediction markets has placed itself in the squarely on the side of platforms like Kalshi, Polymarket, and Robinhood, and against state gaming regulators and officials. The Trump Administration - through the Commodity Futures Trading Commission (CFTC) - has taken this proactive stance with these platforms in multiple states across the country, asserting its governance over them.
Rhode Island joined the list of the states on the receiving end of litigation filed by the CFTC. The agency filed suit in a U.S. District Court Wednesday. Rhode Island wants to halt trading on prediction market sites in the Ocean State. Rhode Island Attorney General Peter Neronha sued Kalshi and Polymarket last week, claiming those platforms violate the state's gaming laws by offering sports-related contracts.
That argument has been used elsewhere.
"CFTC-registered exchanges have faced an onslaught of lawsuits seeking to limit Americans' access to event contracts and undermine the CFTC's sole regulatory jurisdiction over prediction markets," CFTC Chairman Michael Selig said in announcing the CFTC's latest lawsuit. "This power grab ignores the law and decades of precedent."
The Trump Family has financial ties to both prediction markets and the crypto industry. Donald Trump Jr. serves as an adviser to both Kalshi and Polymarket. He also has an indirect financial stake in the Polymarket.
Multiple States Engage With Prediction Markets In Court
In all, 18 states are currently engaged in litigation over prediction markets. Minnesota Gov. Tim Walz signed the Minnesota prediction market ban into law earlier this month. Kalshi filed a suit against Minnesota Wednesday seeking to have the ban overturned.
The legal back-and-forth in follows litigation in Arizona, Connecticut, Illinois, New York, Wisconsin, Massachusetts, and Minnesota.
The Trump Administration maintains that the federal government and CFTC have exclusive jurisdiction to regulate Designated Contract Markets (DCMs) – also known as prediction markets - under the Commodity Exchange Act. Meanwhile, states and Native Tribes continue the fight to outlaw or regulate those platforms. Federal regulators argue that those platforms and their trades fall under their jurisdiction, and not under state or Tribal oversight.
Unlike licensed sports books or casinos, prediction markets are not subject to state-by-state regulation or taxation.
State-By-State Prediction Market Federal Litigation Breakdown
Here's a rundown of the CFTC's legal action against the states in regard to prediction markets:
Minnesota
The Case: A lawsuit filed on May 19 seeks to block a new state law that makes operating or assisting in the operation of a prediction market a criminal felony. The CTFC suit seeks a preliminary injunction to stop the law from going into effect on August 1, 2026.
Prediction markets began as a way for farmers and others in the that industry to hedge against wild spreads in commodity prices. Minnesota is one of the largest agricultural producers in the United States.
Selig Quote: "This Minnesota law turns lawful operators and participants in prediction markets into felons overnight. Minnesota farmers have relied on critical hedging products on weather and crop-related events for decades to mitigate their risks. Governor Walz chose to put special interests first and American farmers and innovators last."
Ohio
The Case: An amicus brief on May 12 filed in the U.S. Court of Appeals for the Sixth Circuit asserting the CFTC's exclusive jurisdiction over prediction markets in a case between Kalshi and the State of Ohio, through its attorney general.
Selig Says: "The federal district court in Ohio took an improperly narrow view of the Commission's jurisdiction, and we are asking the Court of Appeals to correct that error. As I've said repeatedly, the CFTC will not allow overzealous state governments to undermine the agency's longstanding authority over these markets."
Wisconsin
The Case: A lawsuit filed against Wisconsin filed on April 28 came in response to the state's civil lawsuits against Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase, five CFTC-regulated prediction markets. The state asserted those platforms violate state law.
Selig Says: "States cannot circumvent the clear directive of Congress. Our message to Wisconsin is the same as to New York, Arizona, and others: if you interfere with the operation of federal law in regulating financial markets, we will sue you."
New York
The Case: The CFTC sued on April 24 New York in the U.S. District Court for the Southern District of New York after the Empire State filed its own lawsuit against prediction markets. New York Attorney General Letitia James sued crypto exchanges like Coinbase and Gemini, arguing their "yes/no" event contracts amount to illegal online gambling. And lawmakers have also introduced proposals to regulate or ban event contract trading. The CFTC seeks to block that move.
Selig Says: "New York is the latest state to ignore federal law and decades of precedent by seeking to enforce state gambling laws against CFTC-registered exchanges. As I've said before, the CFTC will not allow overzealous state governments to undermine the agency's longstanding authority over these markets."
Massachusetts
The Case: An amicus brief filed Massachusetts Supreme Judicial Court on April 24 asserted the CFTC's jurisdiction over as prediction markets. Massachusetts Attorney General Andrea Campbell won an injunction against Kalshi and Robinhood that forced them stop offering sports and political contracts. That injunction was put on hold when an appeals court heard the case. A ruling is expected within the next 6 weeks.
Arizona
The Case: The U. S. District Court for the District of Arizona – after a complaint filed by the CFTC - granted a temporary restraining order barring Arizona from pursuing criminal charges prediction markets on April 10.
Selig Says: "Arizona's decision to weaponize state criminal law against companies that comply with federal law sets a dangerous precedent, and the court's order today sends a clear message that intimidation is not an acceptable tactic to circumvent federal law."
Arizona, Connecticut, Illinois
The Case: On April 2, three lawsuits challenged the actions of Arizona, Connecticut, and Illinois in regard to their attempted regulation and/or ban of prediction markets. .
Selig Says: "The CFTC will continue to safeguard its exclusive regulatory authority over these markets and defend market participants against overzealous state regulators."
