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The Trump administration on Thursday filed lawsuits against three states, claiming prediction markets should be permitted under the oversight of the federal government.
Those three states include Illinois, Connecticut and Arizona.
All three have taken action to prevent the likes of Kalshi and Polymarket from conducting business in those states.
The three lawsuits filed on Thursday on behalf of the Commodity Future Trading Commission ask federal courts to declare that states have no business regulating these kinds of financial markets.
"This is not just telling the court what their views are, but trying to put a thumb on the scale for prediction markets," Todd Phillips, a Georgia State University professor who focuses on financial regulation, told NPR Thursday afternoon.
"The CFTC will continue to safeguard its exclusive regulatory authority over these markets and defend market participants against overzealous state regulators," CFTC Chairman Michael Selig said in a statement.
Illinois
To date, the state of Illinois has sent cease and desist letters to four prediction market platforms, accusing them of offering unlicensed sports gambling and the violating Illinois Sports Wagering Act and criminal code:
- Kalshi
- Polymarket
- Crypto.com
- Robinhood
Illinois has yet to file a suit against any of these prediction markets.
The Land of Lincoln began regulating sports gambling in 2018, the same year the US Supreme Court overturned The Professional and Amateur Sports Protection Act of 1992 (PASPA), a U.S. federal law that largely banned state-authorized sports betting with some state exceptions.
Connecticut
The Connecticut Department of Consumer Protection ordered these prediction markets to immediately stop operating in the state late last year:
- Kalshi
- Robinhood Derivatives
- Crypto.com
The regulator claims these platforms pose a “serious risk” to consumers.
Arizona
The state of Arizona has been the most aggressive thus far.
Arizona Attorney General Kris Mayes made regulatory history by filing the first-ever criminal charges against Kalshi.
The allegations center on:
- Illegal gambling operations
- Offering event contracts without an Arizona license
From that suit:
“Kalshi may brand itself as a ‘prediction market,’ but what it’s actually doing is running an illegal gambling operation and taking bets on Arizona elections…”
“No company gets to decide for itself which laws to follow.”
- Gilbert Horowitz, Gambling911.com
