CFTC fights states on prediction markets while pushing to relax event contract rules
State battles over prediction markets are widening as the CFTC advances regulatory relief for event contracts and intensifies its own enforcement posture against state interference. The agency has sued New York after state officials were pushed out, expanding its court-driven federal preemption strategy, which already includes an active case against Minnesota and Governor Tim Walz over the nation's first felony ban on prediction markets. Meanwhile, Coinbase's event contract business faces simultaneous pressure from Congress and multiple states, threatening to weaken the exchange's core legal argument that its CFTC federal license shields it from state regulation. Separately, a public comment on CFTC proposed Rule 91 FR 12517 flagged concerns about event contracts tied to military operations, foreign policy decisions, terrorism, or assassination, underscoring the unresolved policy tension even as the agency moves to relax rules.
The CFTC's direct lawsuits against New York and Minnesota give Kalshi institutional federal backing it lacked when it sued Ohio alone. Any federal-preemption win arms the agency's parallel challenges against Wisconsin and deflects Pennsylvania's separate opposition filing.
Joins the CFTC's active Minnesota lawsuit, Kalshi's separate state-level advocacy push, and the Nevada and Washington gambling cases as the fourth major front where prediction market operators are fighting state authority this month, deepening the federal-preemption test across every branch of government.