The CFTC Takes 5 States To Court Over Prediction Markets & Betting

About five days later, on April 28, the Commodity Futures Trading Commission (CFTC) responded with a federal lawsuit against Wisconsin state regulators.

The defendants in this case are Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase.

The CFTC Claims

The matter in contention is that prediction markets, platforms where wagers buy and sell contracts related to real-world event outcomes, are federal instruments. The CFTC backs its claim, saying that these platforms operating on registered Designated Contract Markets (DCMs) are protected by the Commodity Exchange Act.

This Act offers stronger consumer protection guidelines, and it also grants the CFTC exclusive jurisdiction over events, contracts, and swaps.

On March 9, 2026, at the FIA Global Cleared Markets Conference in Boca Raton, Florida, the CFTC Chairman, Michael Selig, said, "Well-functioning markets are truth machines. When participants express views on future events—and back those views with capital—they create accountability, transparency, and information." His argument is that since these markets are transparent and accountable, the CFTC must act fast to offer clean federal regulation.

Selig’s goal is to bring these “truth machines” wholly into the light of American law before the patchwork now being experienced at the state level causes them to shut down.

Why States Are Fighting Back

State regulators are pushing back, with Josh Kaul remaining the face of the state-level opposition. On April 24, 2026, he stated that these contracts are “indistinguishable legally or practically” from sports betting. 

And since these platforms are bypassing rules: state licensing, the 21+ age restriction, taxation, and responsible gambling protections, the state must act to stop what it considers unlicensed gambling.

Other licensed sportsbooks, DraftKings and FanDuel, pay a state-wide 12-20% tax on revenue, but prediction market platforms don’t. And so, Wisconsin strongly believes that prediction markets are offering illegal betting under a guise.

It’s Not Just Wisconsin In The Mix

New York, Illinois, Connecticut, and Arizona’s state regulators are also in this war. But now on a federal level. The CFTC claims that these states’ regulators are overstepping their authority, and throughout April 2026, the agency has been applying more pressure through lawsuits that essentially say: "Regulate early to prevent a shutdown.”