Trump Administration Sues Illinois, Connecticut and Arizona Over Prediction Markets

Submitted by Gilbert Horowitz on

Written by :

Gilbert Horowitz

Published on :

Legal gavel

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 

 

 

Related Content

Kentucky AG Goes for the Trifecta Against Two Prediction Markets and Chumba Casino Parent

Kentucky AG Goes for the Trifecta Against Two Prediction Markets and Chumba Casino Parent

It's deja vu for the online gambling sector as Kentucky comes after companies once again
New Mexico Becomes the Latest State to Sue Kalshi

New Mexico Becomes the Latest State to Sue Kalshi

The suit claims that Kalshi is taking sports bets while evading state laws regulating online gambling.
Judge Blocks Polymarket From Operating in Nevada

Judge Blocks Polymarket From Operating in Nevada

Nevada regulators first filed a complaint back in January asking the court for a declaration and injunction to stop Polymarket from offering unlicensed wagering in violation of state law.
Spain flag

Spain Blocks Prediction Markets Polymarket, Kalshi Over Lack of Gambling Licences

(Reuters) - Spain's Consumer Rights Ministry temporarily banned so-called prediction markets Polymarket and Kalshi ​for operating in the country without a ‌gambling licence, the official state gazette showed on Tuesday.