Federal Agency Sues States That are Trying to Stop Prediction Market Gambling
A federal agency is going to court to make sure online prediction markets can operate in states that don’t want them.
The Commodity Futures Trading Commission (CFTC) has filed lawsuits against New York and Wisconsin and filed legal briefs in Massachusetts, all to stop those states from applying their gambling laws to so-called “prediction markets.”
The CFTC has also previously sued Arizona, Connecticut, and Illinois for the same reason.
Prediction markets like Polymarket and Kalshi exploit loopholes in federal law to bring casino-style gambling to anyone with a smartphone. Whereas traditional gambling operates under state oversight and state law, prediction market platforms claim protection under federal commodities laws.
The out-of-state companies running these platforms claim it’s not gambling. They just offer “financial products” that let people “invest” in the outcome of ballgames, tomorrow’s weather, foreign policy, and so on.
But calling it an “investment” does not change the reality. It’s wagering on uncertain outcomes in hopes of making money.
Several states have tried to treat prediction markets exactly like what they are — gambling operations — and enforce their state gambling laws against them. The CFTC is now suing those states to stop them, arguing that Congress gave the CFTC exclusive authority to regulate these platforms as financial exchanges.
CFTC Chairman Michael Selig put it bluntly: “To any state that seeks to nullify federal law and seize authority over these markets, I say again: we will see you in court.”
In other words, a federal agency is using the courts to override the decisions of state governments that want to protect their citizens from predatory gambling.
We have written before about how prediction markets are particularly troubling because they operate without state oversight. When prediction market platforms let users trade hundreds of millions of dollars on the Super Bowl game outcomes — plus millions more on trivial bets like which song would play first at halftime — that is not investing. That is gambling.
And this kind of predatory gambling destroys families. Sports betting is out of control. It’s ruining lives and corrupting sports. Studies indicate people who gamble on sports may be twice as likely to suffer from gambling problems. The damage is worse when the sports betting happens online.
Now the federal government wants to make sure gambling companies can reach into every state in America — whether those states want it or not.
Arkansas already has a serious gambling problem. Arkansans wagered more than $86.5 million on sports betting in March alone. If the CFTC succeeds in its campaign to block states from regulating these platforms, Arkansas will have even less ability to protect its citizens from this new wave of online gambling.
As powerful corporations try to make gambling part of everyday life, it’s important for Arkansas to protect its citizens and families from predatory gambling. Otherwise gambling addiction will simply continue wrecking lives and hurting families in our state.
Articles appearing on this website are written with the aid of Family Council’s researchers and writers.
