The Commodity Futures Trading Commission (CFTC) filed an amicus brief Tuesday (May 12) reaffirming its exclusive jurisdiction over prediction markets.
The CFTC filed the brief in the court battle between prediction market Kalshi and the state of Ohio, according to a Tuesday press release from the CFTC.
The filing outlines the regulatory scheme designed by Congress and details how that scheme preempts state laws as applied to markets regulated by the CFTC, according to the release.
“The federal district court in Ohio took an improperly narrow view of the Commission’s jurisdiction, and we are asking the Court of Appeals to correct that error,” CFTC Chairman Michael S. Selig said in the release. “As I’ve said repeatedly, the CFTC will not allow overzealous state governments to undermine the agency’s longstanding authority over these markets.”
The filing is the most recent step in the CFTC’s effort to protect its jurisdiction over prediction markets from state encroachments. The regulator has filed lawsuits against five states — Arizona, Connecticut, Illinois, New York and Wisconsin — and secured a preliminary injunction against state regulation of CFTC-regulated prediction markets in Arizona.
In the Arizona case, a judge granted a temporary restraining order that prevents Arizona from pursuing criminal charges against contract markets that are governed by the CFTC. The state’s attorney general had filed criminal charges against Kalshi, alleging that the company violated state laws that prohibit operating an unlicensed wagering business and that ban betting on elections.
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In another case, a federal appeals court ruled for the first time that the CFTC has exclusive jurisdiction over sports-related event contracts. That decision came in a case in which Kalshi sued New Jersey after the state sent the company a cease and desist letter saying that sports-related event contracts violate its gambling laws. Kalshi argued that its event contracts can only be regulated by the CFTC.
In the CFTC’s separate lawsuits against Arizona, Connecticut and Illinois, which were filed in April, the regulator contends that the states have taken actions that intrude on the CFTC’s exclusive jurisdiction to regular prediction markets. The three states have attempted to regulate, outlaw or otherwise restrain the activities of CFTC-registered designated contract markets that facilitate trading in lawful event contracts, the CFTC said at the time in a press release.
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