April 24 proved to be a significant day for litigation surrounding prediction markets, with the Commodity Futures Trading Commission (CFTC) and various operators taking decisive legal actions as courts delivered pivotal rulings.
The CFTC, which regulates federal derivatives trading, intensified its legal efforts against state-level initiatives by filing a lawsuit in New York and intervening in a case in Massachusetts.
In New York, the CFTC, alongside the Department of Justice, sought to halt state enforcement actions, asserting that federal law governs event contracts. They emphasized that this law designates the CFTC as the sole federal authority responsible for regulating commodity futures, options, and swaps on federally regulated exchanges.
The complaint challenges the authority of the state, stating that New York's efforts to close federally regulated markets violate the federal framework established by Congress to oversee national swaps markets.
On the same day, the CFTC backed Kalshi in Massachusetts by filing an amicus brief in support of the company’s case, arguing that event contracts should fall under federal derivatives law, which supersedes state gambling regulations.
Chairman Michael S. Selig expressed concern about ongoing illegal enforcement actions by some states against CFTC-regulated exchanges, despite multiple court rulings that have halted such efforts. He reiterated that Congress has granted the CFTC exclusive authority to regulate commodity derivatives markets, including prediction markets, and warned states attempting to override federal law that they would face legal action.
Previously, the CFTC had filed similar lawsuits against Connecticut, Arizona, and Illinois, and it also supported Kalshi in its case against Arizona, securing a temporary restraining order against the state.
In another development, Kalshi has accelerated its legal efforts in Utah. After the state indicated its intent to enforce regulations, Kalshi filed a renewed motion for a preliminary injunction, with both parties agreeing to a swift briefing schedule. Utah is expected to submit its opposition by May 1, and Kalshi will respond by May 8, requesting a hearing at the earliest possible date thereafter.
Meanwhile, on April 23, Wisconsin initiated enforcement actions against prediction markets, filing complaints against Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase. The following day, Polymarket sought to transfer the case to federal court, with Crypto.com and Kalshi joining the move shortly thereafter.