Cruz bill would shift prediction market oversight from CFTC to states
Senator Cruz (R-Texas) plans to introduce legislation after the midterms that would strip federally regulated prediction markets of federal oversight and place them under state jurisdiction. The bill would block platforms from offering event contracts tied to gambling activities, including sports betting, unless permitted by state law. Cruz has been a vocal critic of federal regulatory approaches to emerging financial products.
The bill would erase the CFTC preemption shield that Kalshi and Polymarket have fought to defend in Ohio and Tennessee. State attorneys general would gain explicit congressional license to treat sports event contracts as gambling, copying the Ohio and Tennessee template nationwide. Platforms would face fifty separate licensing regimes instead of one federal registration.
Kalshi already lost preemption in two circuits; a federal statute codifying state jurisdiction would end any hope of restoring it. The bill would force operators to choose between expensive state-by-state compliance, product redesign, or market retreat before the CFTC's pending swap rules could offer alternative cover.
Cruz joins the NFL and state attorneys general in attacking CFTC preemption, adding congressional pressure to the legal push already costing Kalshi its federal shield in Ohio and Tennessee.