The Commodity Futures Trading Commission (CFTC) and the U.S. Department of Justice (DOJ) have filed parallel federal lawsuits against the states of Illinois, Connecticut, and Arizona, as well as their gaming regulators, over the federal government’s right to regulate prediction markets.

 

The filings, which were made on Thursday, aim to prevent these states from restricting prediction market companies and enforcing state-level rules on them. The CFTC claims that it possesses exclusive regulatory authority over prediction markets and says it will defend participants from what it describes as overzealous state regulators.

 

With this move, the CFTC seeks to halt strict regulatory actions taken by these states’ authorities, including several cease-and-desist letters issued to prediction market companies such as Kalshi and Polymarket.

 

What These States Did

Earlier this year, the Arizona Attorney General filed criminal charges against KalshiEx LLC and Kalshi Trading LLC, accusing them of operating an illegal gambling business without a state license and violating state election wagering laws.

 

In December 2025, the Connecticut Department of Consumer Protection (DCP) issued cease-and-desist orders to multiple prediction market platforms, including Kalshi, Crypto.com, and Robinhood, accusing them of offering illegal sports event contracts and operating unlicensed online gambling operations within the state.

 

In April 2025, the Illinois Gaming Board (IGB) issued cease-and-desist letters to Kalshi, Polymarket, and Crypto.com, asserting that the sports event contracts offered by these platforms constituted illegal wagering under Illinois gambling law.

 

In the court filing against Illinois Governor JB Pritzker, Attorney General Kwame Raoul, and the Illinois Gaming Board, the U.S. commodities regulator argues that event contracts traded on approved exchanges qualify as “swaps” under federal law, not gambling. The regulator also contends that Congress granted it exclusive jurisdiction and that Illinois’s insistence on licensing requirements amounts to an attempt to block federally regulated exchanges from operating.

 

Image credit: courtlistener

 

CFTC Acting Chair Michael Selig reiterated in a post on X that the CFTC has exclusive authority to regulate prediction market activity in the United States, and confirmed that the lawsuit was jointly filed by his agency and the U.S. Department of Justice.

 

 

Crackdown on Prediction Market Intensifies

Prediction market companies have faced intense crackdowns and regulatory restrictions in the U.S. in recent times. There are currently over 20 nationwide lawsuits filed against prediction market companies by regulators from several states, including New York, Washington, Nevada, and Massachusetts.

 

Outside the U.S., there have also been several strict regulatory actions by authorities in multiple countries, with many regulators accusing prediction market companies, especially Polymarket and Kalshi, of operating unregistered gambling activities and offering illegal sports event contracts in their jurisdictions.

 

 

An Argentine court has ordered a nationwide block on the prediction market platform Polymarket over unauthorized gambling activities.

 

The ruling, issued by the Criminal, Misdemeanor and Offenses Court No. 31 in Buenos Aires, directs the country’s national communications and media regulator, the Ente Nacional de Comunicaciones (ENACOM), to block access to Polymarket and its variants.

 

 

In the ruling, Judge Susana Beatriz Parada, the presiding judge of the court, instructed ENACOM to carry out all possible blocking measures, directly, indirectly, or through internet service providers (ISPs), and to promptly inform the court of any obstacles that could prevent full compliance with the ruling.

 

In addition to the nationwide ban, the court ordered the removal of the Polymarket application from Android and iOS stores, effectively preventing existing users from accessing it.

 

While the ruling appears severe, it follows an investigation into a complaint filed by the Buenos Aires City Lottery (LOTBA), the government agency responsible for regulating legal gambling activities in Argentina’s capital.

 

After receiving the complaint, the court, presided over by Judge Susana Parada, instructed Juan Rozas, head of the City’s Specialized Gambling Prosecutor’s Office (FEJA), to conduct an investigation that ultimately led to the decision.

 

According to Argentine authorities, Polymarket offers features that “significantly increase risks for users.” These include the ability to conduct transactions using cryptocurrencies and credit cards, as well as a lack of identity and age verification, allowing anyone to create an account within minutes.

 

Authorities say these features raise serious concerns about minors, who can easily access the platform and begin gambling without oversight.

 

 

Polymarket and Regional Bans

With this ban, Argentina joins more than 33 countries and regions that have restricted or prohibited the activities of Polymarket, many citing the company’s unlicensed gambling operations.

 

Colombia was the first South American country to block Polymarket. In late 2025, Coljuegos, the country’s gambling regulator, declared Polymarket’s activities illegal, stating that the company was offering unauthorized online betting.