CFTC Sues States to Reaffirm Exclusive Jurisdiction Over Prediction Markets

CFTC Press Releases

Filed April 2nd, 2026

Detected April 3rd, 2026

Summary

The Commodity Futures Trading Commission filed lawsuits against Arizona, Connecticut, and Illinois challenging state actions that restrict prediction market activities by CFTC-registered designated contract markets. The suits seek declaratory and injunctive relief to reaffirm CFTC's exclusive jurisdiction over event contracts under the Commodity Exchange Act. The CFTC is defending its regulatory authority against what it characterizes as overzealous state regulators attempting to impose inconsistent obligations on market participants.

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What changed

The CFTC filed three lawsuits (Release No. 9206-26) against Arizona, Connecticut, and Illinois seeking declaratory and injunctive relief to establish federal exclusive jurisdiction over prediction markets and event contracts. The lawsuits name state officials Katie Hobbs (Arizona), JB Pritzker (Illinois), and Ned Lamont (Connecticut) as respondents. The CFTC argues that Congress deliberately established a national framework for commodity derivatives markets under the Commodity Exchange Act, rejecting fragmented state-by-state regulation due to concerns about poorer consumer protection and increased fraud and manipulation risks.

Designated contract markets and prediction market operators should continue operating under CFTC oversight while monitoring these proceedings. Market participants who have faced state regulatory actions in Arizona, Connecticut, or Illinois may benefit from coordination with the CFTC's enforcement position. The CFTC expects to move forward with additional regulation reinforcing prediction market obligations following its Advanced Notice of Proposed Rulemaking on the topic.

What to do next

Review prediction market activities for CFTC compliance requirements
Monitor state regulatory developments in Arizona, Connecticut, and Illinois
Coordinate with legal counsel regarding CFTC's exclusive jurisdiction position

Source document (simplified)

Release Number 9206-26

CFTC Sues Trio of States to Reaffirm its Exclusive Jurisdiction Over Prediction Markets

April 02, 2026

WASHINGTON — The Commodity Futures Trading Commission today filed lawsuits challenging the actions of Arizona, Connecticut, and Illinois against CFTC-registered designated contract markets.

Despite the CFTC’s clear and longstanding exclusive jurisdiction to regulate event contracts under the Commodity Exchange Act, various states have attempted to outlaw, regulate, or otherwise restrain the activities of DCMs that facilitate trading in lawful event contracts. Congress long ago decided that a national framework for commodity derivatives markets was preferable to a fragmented patchwork of state regulations.

“The CFTC will continue to safeguard its exclusive regulatory authority over these markets and defend market participants against overzealous state regulators,” said CFTC Chairman Michael S. Selig. “This is not the first time states have tried to impose inconsistent and contrary obligations on market participants, but Congress specifically rejected such a fragmented patchwork of state regulations because it resulted in poorer consumer protection and increased risk of fraud and manipulation.”

The CFTC recently issued an Advanced Notice of Proposed Rulemaking to assist the agency with identifying areas of confusion regarding the proper application of the CEA and the CFTC’s regulations to prediction markets and expects to move forward with regulation reinforcing those obligations.

The CFTC first officially recognized event contracts in 1992 when it allowed the Iowa Electronic Markets, a futures market at the University of Iowa in which traders can buy and sell contracts pegged to events such as presidential elections and corporate earnings. In the wake of the 2008 financial crisis, Congress expressly granted the CFTC comprehensive authority over any such contract based on a commodity, which is broadly defined in statute. The CEA is designed to account for innovation in the financial markets, allowing for new and emerging use cases within CFTC-regulated markets.

-CFTC-