CFTC sues Illinois over state’s cease-and-desist letters against prediction markets
The CFTC argued in a lawsuit that the Commodity Exchange Act gave it “exclusive jurisdiction” over all swaps, which include prediction markets.
What to know:
- The CFTC filed a lawsuit against Illinois, after the state tried to shutter prediction market providers’ sports-related products.
- The lawsuit is the latest in a back-and-forth between the federal regulator and states over who can oversee sports-related prediction markets.
- States argue that sports-related prediction markets are just gambling, while the CFTC argues that these products fall under federal jurisdiction.
In the lawsuit, the CFTC continued this argument, saying Illinois’s efforts “intrudes on” the CFTC’s role, and that federal law preempts state regulations in this matter.
“Event contracts are derivative instruments that enable parties to trade on their predictions about whether a future event — which may relate to economics, or elections, or climate, or sports, or anything else of a potential financial, economic or commercial consequence — will occur,” the filing said.
The CFTC, especially under current Chairman Mike Selig, has argued that prediction markets are federally regulated, even as many of these companies expand to allow customers to place bets on sporting events. States, under both Republicans and Democrats, have pushed back. Nevada’s Gaming Control Board secured a temporary restraining order against Kalshi last month, with a hearing set for Friday.
