CFTC and Prediction Market Operators Launch Legal Offensive Against State Enforcement in Multistate Battle

Federal regulators and operators like Kalshi go on the offensive against state laws, while the Sixth Circuit signals skepticism toward federal preemption.

By: AXL Media

Published: Apr 27, 2026, 9:26 AM EDT

Source: Information for this report was sourced from Gambling Insider

Federal Regulators Assert Exclusive Jurisdiction Over Swaps

The Commodity Futures Trading Commission, supported by the Department of Justice, initiated a significant legal offensive by filing suit against New York to block state level enforcement against prediction markets. Federal authorities argue that event contracts are commodity derivatives subject to the exclusive jurisdiction of the CFTC. According to Chairman Michael S. Selig, the agency will continue to challenge any state that seeks to nullify federal law or seize authority over these federally regulated markets, mirroring previous legal actions taken in Connecticut, Arizona, and Illinois.

Operators Migrate State Conflicts to Federal Courts

In response to enforcement actions launched by Wisconsin on April 23, major operators including Polymarket, Kalshi, Crypto.com, Robinhood, and Coinbase moved to relocate their cases to federal court. These companies maintain that their offerings constitute swaps under federal law, which should preempt state gambling enforcement. Simultaneously, Kalshi has accelerated its push for a preliminary injunction in Utah, with both parties agreeing to an expedited briefing schedule that targets a court hearing shortly after May 8, 2026.

Sixth Circuit Sets Precedent for State Enforcement Rights

The United States Court of Appeals for the Sixth Circuit delivered a potential blow to the industry by denying Kalshi’s request for an emergency injunction against Ohio’s sports betting enforcement. The court expressed skepticism toward the merits of the operators’ arguments, emphasizing that Ohio possesses a strong interest in enforcing its own gambling laws. This ruling suggests that even if federal law is applicable, the underlying public interest served by state regulations remains a heavyweight factor in judicial deliberations.