Senators Move to Block CFTC From Spending Federal Funds on State Prediction Market Lawsuits

A group of Democratic senators is pressing Congress to stop the Commodity Futures Trading Commission (CFTC) from using federal money to sue states over their regulation of online prediction markets.

Led by Richard Blumenthal of Connecticut and Jeff Merkley of Oregon, the effort has drawn support from 15 colleagues who argue that the CFTC is undermining state authority and fueling gambling risks.

In a letter to the Senate Appropriations Subcommittee on Financial Services and General Government, the senators warned that “recent lawsuits filed by the CFTC against states regulating online prediction markets will only fuel a gambling public health crisis and interfere with states’ and Tribes’ longstanding prerogative to regulate or even restrict gambling.”

The push comes after the CFTC filed suits against nine states, including Connecticut, Illinois, Arizona, Wisconsin, New York, Minnesota, Rhode Island, New Mexico, and, recently Kentucky.

Blumenthal has been outspoken in recent weeks, accusing the agency of acting as “nothing more than a tool” for operators like Kalshi and Polymarket. He said the commission has put market interests ahead of its duty to protect consumers and public safety.

Senators cite state authority and gambling risks

In their letter, the senators stressed that prediction markets differ sharply from the original purpose of event contracts, which were designed to hedge financial risks in agriculture and economic sectors.

Instead, they argued, prediction markets have expanded into sports, politics, and foreign affairs, creating gambling products that states are right to treat as wagers.

“Through engaging in this campaign of litigation and intimidation, the CFTC risks becoming an instrument and enabler of online prediction markets’ efforts to bypass states’ consumer protections and oversight, creating a race-to-the-bottom in gambling,” they wrote.

States and Tribes have already taken steps to regulate or restrict prediction markets, with some demanding permits and special taxes, while others have tried to ban operators outright.

The senators say these efforts are being blocked by the CFTC’s lawsuits, which assert exclusive jurisdiction over the sector. They urged appropriators to include language in the Fiscal Year 2027 funding bill that would bar the agency from spending federal dollars to challenge state gambling laws or compacts.

Senators Move to Block CFTC From Spending Federal Funds on State Prediction Market Lawsuits

Senators cite state authority and gambling risks

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