Federal vs. state power: Who regulates prediction markets?

"When will traffic at the Strait of Hormuz return to normal?" Depending on when you believe this will happen and which prediction market you're using, a $100 position on this event contract could net as much as $400. But if you live in one of the states suing the prediction market Kalshi, you might not be able to profit off your hunch. In April, Wisconsin sued Kalshi and several other prediction markets—platforms that let people make bets on the outcomes of various events—alleging that they facilitate illegal sports gambling. The platforms, and their millions of users, have found an unlikely ally: the federal government. Shortly after Wisconsin filed suit, the U.S. Commodity Futures Trading Commission (CFTC)—the federal body that regulates prediction markets—filed a legal challenge against the state. The CFTC argues that the Commodity Exchange Act (CEA) gives it "exclusive jurisdiction" in the "operation of federal law in regulating financial markets," including prediction markets, which operate more like marketplaces than gaming houses. Wisconsin isn't the only state treating prediction markets as traditional gambling. Arizona, Connecticut, Illinois, New Jersey, and Massachusetts have all pursued legal action against these platforms. The CFTC has countersued these states too, and has filed amicus briefs