CFTC sues AZ, CT, and IL, alleging prediction markets overstep
When Commodity Futures Trading Commission (CFTC) Chair Michael Selig said “we’ll see you in court”, he wasn’t kidding.
The CFTC announced on Thursday that, in conjunction with the federal Department of Justice, it has filed lawsuits in three separate federal courts against the states of Arizona, Connecticut, and Illinois. The lawsuits name as defendants the respective governors and attorneys general of the three Democratic-run states.
The federal derivatives regulator said the unprecedented moves are aimed at challenging the states’ “aggressive and overzealous” attempts to rein in federally regulated prediction markets.
“Despite the CFTC’s clear and longstanding exclusive jurisdiction to regulate event contracts under the Commodity Exchange Act, various states have attempted to outlaw, regulate, or otherwise restrain the activities of DCMs that facilitate trading in lawful event contracts,” stated a CFTC release. “Congress long ago decided that a national framework for commodity derivatives markets was preferable to the fragmented patchwork of state regulations.”
Selig brands state regulators ‘inconsistent and contrary’
Selig wrote in a series of posts on X that the CFTC’s actions “come as a direct response to states’ attempts to undermine the CFTC’s exclusive jurisdiction over prediction markets that offer trading in CFTC-regulated event contracts.”
Arizona, Connecticut and Illinois have all taken some kind of firm action against prediction market platforms such as Kalshi, Polymarket and Crypto.com, although they are far from the only three to do so. All three issued cease-and-desist letters to Kalshi and others in an attempt to shut down their sports event contract trading within their respective states, and Arizona recently became the first state to file criminal charges against Kalshi.
“These states’ aggressive and overzealous attempts to overstep the CFTC have led to market uncertainty and risks destabilizing effects for market participants and our registrants,” added Selig.
In a statement in the CFTC press release, Selig stated that the commission “will continue to safeguard its exclusive regulatory authority.”
“This is not the first time states have tried to impose inconsistent and contrary obligations on market participants, but Congress specifically rejected such a fragmented patchwork of state regulations because it resulted in poorer consumer protection and increased risk of fraud and manipulation.”
Pouring fuel on the fire
The CFTC has already intervened in court cases related to event contracts via an amicus brief in Crypto.com’s court case in the U.S. Court of Appeals for the Ninth Circuit.
But its willingness to step up the fight by suing states is a major escalation of the most contentious issue in gaming right now.
It also completes the remarkable change in stance from the Donald Trump-era federal regulator. Just two years ago, under the Joe Biden administration, the CFTC was battling to try to shut down exchange marketplaces that were offering contracts for trading.
https://sbcamericas.com/2026/04/02/ctfc-sues-arizona-connecticut-illinois/