The Commodity Futures Trading Commission (CFTC) and the Department of Justice have filed a lawsuit against Illinois and state officials. The suit challenges Illinois's recent cease-and-desist letters sent to prediction market providers.
The CFTC argues prediction markets offer 'event contracts'-derivative swaps regulated under the federal Commodity Exchange Act. This grants the CFTC exclusive jurisdiction, preempting state regulation. Illinois contends the markets are sports gambling products requiring state oversight.
The clash reflects a broader regulatory battle. Nevada's Gaming Control Board recently secured a restraining order against prediction market firm Kalshi. The CFTC will also participate in a Ninth Circuit appeals court hearing involving Kalshi, Robinhood, and the North American Derivatives Exchange.