Pennsylvania regulators clash with CFTC over prediction market gambling classification
The Pennsylvania Gaming Control Board has formally told the U.S. Commodity Futures Trading Commission that prediction markets constitute illegal sports wagering under state law, adding a state regulatory voice to the intensifying federal debate. The filing, submitted ahead of proposed CFTC rulemaking on event contracts, argues that event contracts offered on these platforms violate Pennsylvania statute. Separately, Pennsylvania lawmakers introduced legislation that would impose a state tax on prediction markets, ban insider trading, and empower gambling regulators to restrict certain event contracts — representing an early effort to build a state-level framework outside federal oversight. The CFTC pushed back on May 12, 2026, filing in appeals court that states lack authority to classify prediction markets as gambling and asserting federal preemption under the Commodity Exchange Act. Courts remain divided on the jurisdictional question.
Forces prediction market operators like Kalshi and Polymarket to navigate conflicting federal and state claims simultaneously, raising legal exposure in Pennsylvania while the CFTC fights to nullify that posture in appeals court.