US Federal Agencies Intervene to Shield Prediction Markets from State Gambling Laws

The US Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) have formally requested that a federal court halt Arizona's legal actions against Kalshi, a prominent event-contract platform. The federal agencies argue that these contracts are classified as swaps under the Commodity Exchange Act, placing them under the exclusive jurisdiction of the CFTC rather than state-level gambling authorities. This intervention comes as Arizona Attorney General Kris Mayes pursues criminal charges against Kalshi, alleging the company operated an unlicensed gambling business and offered illegal wagering on elections. Kalshi CEO Tarek Mansour has dismissed these charges as a regulatory overstep, maintaining that the platform's activities do not constitute gambling. The dispute is part of a wider national trend, with 11 US states currently pursuing legal action against prediction markets. The CFTC has similarly filed lawsuits against regulators in Illinois and Connecticut to protect the federal status of registered designated contract markets. The legal outcome will determine the viability of prediction markets in the US. Meanwhile, the sector faces additional headwinds as Senator Adam Schiff has introduced legislation to ban bets on terrorism, death, and war following allegations of insider trading related to US-Iran military tensions.