In short
- The DOJ and CFTC sued Illinois, Arizona, and Connecticut to defend prediction markets from state regulation.
- The Trump administration argues platforms like Kalshi and Polymarket fall underneath federal—not state—authority.
- The transfer escalates a nationwide authorized battle over whether or not prediction markets are playing or federally regulated occasion contracts.
The Justice Division and the CFTC collectively filed lawsuits Thursday in opposition to Illinois, Arizona, and Connecticut, coming to assistance from prediction markets within the newest escalation of an ongoing jurisdictional battle over the novel sector.
Within the lawsuits, the Trump administration argues the CFTC has unique jurisdiction to manage sports-related wagers on well-liked prediction market platforms together with Polymarket and Kalshi.
Within the final yr, a rising variety of states have sued such platforms, arguing sports-themed prediction markets are not occasion contracts underneath the CFTC’s purview—however, as a substitute, unregulated sports activities betting by one other title.
The @CFTC has clear and longstanding unique jurisdiction to manage prediction markets. However not too long ago, state regulators have tried to impose inconsistent and opposite obligations on CFTC-registered prediction markets. In response, the CFTC and @TheJusticeDept right now filed three…
— Mike Selig (@ChairmanSelig) April 2, 2026
In suing Illinois, Arizona, and Connecticut—three of a number of states which have come after prime prediction market platforms—the Trump administration has made maybe its most forceful transfer but to free the rising sector from state playing laws.
“The CFTC will proceed to safeguard its unique regulatory authority over these markets and defend market contributors in opposition to overzealous state regulators,” mentioned CFTC Chairman Michael Selig, in a press release. “This isn’t the primary time states have tried to impose inconsistent and opposite obligations on market contributors, however Congress particularly rejected such a fragmented patchwork of state laws as a result of it resulted in poorer shopper safety and elevated threat of fraud and manipulation.”
The DOJ and CFTC argued right now that by sending stop and desist letters final yr to Polymarket, Kalshi, and Crypto.com, state regulators violated a federal legislation granting the CFTC unique authority to manage occasion contracts.
“This Courtroom ought to put an finish to the continuing efforts by Defendants to undermine the uniform utility of federal legislation,” Thursday’s criticism in opposition to Illinois, filed within the U.S. District Courtroom for the Northern District of Illinois, reads.
In the previous couple of weeks, state regulators have notched notable early victories in opposition to prediction markets. Final month, Nevada grew to become the primary state to efficiently ban a prediction market platform quickly, as its lawsuit in opposition to the platform, Kalshi, heads to trial.
Immediately’s lawsuits might quickly be adopted by extra, given a number of different states have issued stop and desist orders to prediction market platforms providing sports-related wagers.
In going after Illinois and Connecticut first, the Trump administration has set its sights on two deep-blue states. Trump has, particularly, lambasted Illinois Governor J.B. Pritzker for resisting components of the White Home’s immigration crackdown, and referred to him late final yr as “an enormous fats slob.” Pritzker was named as a defendant in right now’s lawsuit in opposition to the state of Illinois.
Whereas Arizona did vote for Trump in 2024, the “purple” state at the moment boasts two Democratic senators and a Democratic governor. Final month, the state grew to become the primary within the nation to file prison prices in opposition to a prediction market platform, Kalshi, for allegedly working an unlawful playing enterprise with no license.
However tensions over prediction market regulation aren’t strictly partisan. A number of crimson states have gone after Polymarket and Kalshi’s sports activities wagers in the previous couple of months, together with Tennessee. And the federal government of Utah, which swung for Trump by greater than 20 factors in 2024, has emerged as one of many main critics of the ballooning sector.
The Trump administration, nevertheless, has taken an aggressively supportive strategy in direction of prediction markets. The president’s media firm has its personal prediction market-related ambitions, and his son, Donald Trump Jr., at the moment advises each Polymarket and Kalshi.
Even the DOJ itself now shares some DNA with the profitable sector. Yaakov Roth, the principal deputy assistant legal professional basic representing the federal authorities in its new case in opposition to Illinois, beforehand represented Kalshi within the firm’s landmark victory in opposition to the CFTC in 2024.
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