Trump Administration and CFTC Sue Three States to Block Prediction‑Market Gambling Rules
The Trump administration, on behalf of the Commodity Futures Trading Commission, filed federal lawsuits against Illinois, Connecticut and Arizona to block those states from applying gambling laws to prediction markets, arguing such markets are "swaps" subject to the CFTC’s exclusive authority. CFTC Chair Michael Selig vowed to defend that jurisdiction, and experts say the clash — underscored by Arizona’s prior criminal charges against Kalshi — raises the likelihood the Supreme Court will ultimately have to decide whether prediction markets are finance or gambling.
📌 Key Facts
- On April 2, 2026, the Trump administration filed three federal lawsuits against Illinois, Connecticut and Arizona seeking to block those states from applying gambling laws to prediction markets.
- The suits, brought on behalf of the Commodity Futures Trading Commission (CFTC), argue that prediction markets are 'swaps' that fall under the CFTC’s exclusive federal regulatory authority rather than state gambling commissions.
- CFTC Chairman Michael Selig said the agency will safeguard its exclusive regulatory authority over prediction markets and defend market participants against what he called overzealous state regulators.
- Separately, Arizona filed criminal charges in March 2026 against prediction‑market platform Kalshi alleging violations of state gaming laws, illustrating a direct conflict between state enforcement and the federal CFTC’s position.
- Legal experts say the new lawsuits escalate the regulatory conflict and increase the likelihood the Supreme Court will ultimately have to decide whether prediction markets are legally finance (federal jurisdiction) or gambling (state jurisdiction).
📊 Relevant Data
Hispanic adults exhibit the strongest associations between substance use and gambling behaviors, with cannabis use linked to a 22.6% increase in online gambling participation.
High stakes: Associations between substance use and gambling behaviors by race in the United States — PubMed
Non-Hispanic Black adults show high baseline gambling odds independent of substance use, with cannabis use associated with a 15.0% increase in sports gambling.
High stakes: Associations between substance use and gambling behaviors by race in the United States — PubMed
Young women represent 26% of Kalshi's user base in 2026, up from 13% 10 months prior, as the platform targets this demographic for growth.
Kalshi wants to grow its user base with young women — LinkedIn
32% of African Americans in Ohio who engage in betting met the criteria for a gambling disorder or were at risk, according to a 2022 study, amid concerns about betting impacts on the Black community.
Experts Raise Concerns About the Impact of Betting on the Black Community — Pause Before You Play
📰 Source Timeline (2)
Follow how coverage of this story developed over time
- The Trump administration filed three federal lawsuits on Thursday against Illinois, Connecticut and Arizona to block those states from applying gambling laws to prediction markets.
- The suits, brought on behalf of the Commodity Futures Trading Commission, argue that prediction markets are 'swaps' and fall under the CFTC’s exclusive regulatory authority, not state gambling commissions.
- CFTC Chairman Michael Selig issued a statement vowing to 'safeguard [the CFTC’s] exclusive regulatory authority over these markets and defend market participants against overzealous state regulators.'
- Arizona had already filed criminal charges against Kalshi in March 2026 alleging violations of state gaming laws, underscoring the direct conflict between state and federal regulators.
- Experts quoted say these new lawsuits escalate the conflict and increase the odds the Supreme Court will eventually have to decide whether prediction markets are legally finance or gambling.