There is acknowledged legal ambiguity and potential divergence in rulings that could influence future federal preemption and enforcement.”

The enforcement hinges on the view that event contracts treated as swaps fall under federal law, not state gambling codes.

The suits follow 2025 cease‑and‑desist letters from states to Kalshi and Polymarket over gambling licensing concerns.

The Ninth Circuit appeal in Kalshi-related cases is moving forward this spring, part of ongoing litigation with Kalshi, Robinhood, and others.

The US CFTC has filed lawsuits in multiple federal courts challenging state efforts to ban or regulate prediction markets like Kalshi and Polymarket, arguing the CFTC holds sole federal jurisdiction over these markets.

Experts view the lawsuits as a major escalation that could shape whether these markets are regulated as finance or gambling, possibly reaching the Supreme Court.

The DOJ’s involvement signals broad federal enforcement interest, including investigations into insider trading and suspicious trading around political and economic events.

Prediction markets have gained visibility across political events, economic data, and other real-world outcomes, elevating regulatory stakes.

Legislative activity and industry tension persist over jurisdiction and market impact, with competing federal and state perspectives.

Industry insiders are tied to politics, with figures linked to Kalshi and Polymarket, and past insider-trading episodes cited as context for scrutiny.

Some platforms have strengthened rules against insider trading, though regulators may remain unsatisfied with self-policing.

Event contracts trace roots to academic markets for elections and indicators, with federal oversight expanding after the 2008 crisis to curb manipulation.