The Commodity Futures Trading Commission (CFTC) received an early win in its battle with certain states that are challenging federal oversight of prediction marketplaces.
A group of different states are pursuing prediction markets like Kalshi and Polymarket arguing they should be regulated under state gaming rules.
The CFTC, worried about a national mishmash of rules that will crush innovation in its infancy, recently announced it would sue these states.
In a post on X today, CFTC Chairman Mike Selig announced it had its regulatory power affirmed in the state of New Jersey.
The Third Circuit Court of Appeals’ decision today reaffirms Congress’ intent for the @CFTC to have exclusive regulatory jurisdiction over trades on DCMs. I applaud the Court’s decision to uphold federal law and reject the New Jersey Division of Gaming Enforcement’s attempt to…
— Mike Selig (@ChairmanSelig) April 6, 2026
Designated Contract Markets or DCMS represent CFTC regulated swaps with economic consequences. In this case it is the events markets where individuals bet on potential outcomes with a financial aspect. The ruling in New Jersey is the first federal appellate win on the preemption issue.
While one battle victory does not mean the war is over, the win buttresses the CFTC’s legal argument as it challenges other states like Arizona, Illinois and others that do not like the federal government’s decision to include prediction markets in their oversight portfolio.
