Prediction Markets Spark State-CFTC Jurisdiction Battle
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- Polymarket and Kalshi have been challenged by several US states this year as the prediction market sector has grown.
- The CFTC argues that federally regulated event contracts fall under its "exclusive jurisdiction" rather than state gambling laws.
- The jurisdiction dispute is now moving through federal courts, with the outcome set to determine which regulator oversees event-contract trading.
- Legal observers say conflicting appellate rulings could eventually prompt the US Supreme Court to decide whether states or the CFTC have primary authority over prediction markets.
Why it matters: The jurisdictional fight will determine whether prediction market operators answer to a single federal regulator or a patchwork of state gambling regimes. With Kalshi and Polymarket already named in state challenges this year, a CFTC win would consolidate federal oversight while a state-side loss could fragment compliance requirements and restrict market access.
