The CFTC vs states battle, key player positions, CLARITY Act odds, and what it means for your money. Updated July 12, 2026.
States litigating
18+
Amicus states
38 states
Active legislation
3
Platforms
9
The key takeaway from this page
Federal rulemaking, state litigation, platform posture, and the policy voices moving all four
The End Prediction Market Corruption Act, introduced by Sens. Jeff Merkley (D-OR) and Amy Klobuchar (D-MN), would prohibit the president, vice president, and members of Congress from trading event contracts. Co-sponsors include Sens. Van Hollen, Schiff, and Gillibrand. Violations carry $10,000+ fines and profit disgorgement.
3
Senate co-sponsors
$10K+
Min. fine per violation
2
Related bills (+ Murphy, Torres)
PredictionMarkets.us take: This targets government insiders, not retail traders. If anything, clear insider trading rules could strengthen institutional trust in prediction markets. The bill is separate from Murphy's war/mortality ban and the Clarity Act — three different bills pulling in three different directions. See our insider trading explainer for context.
NPR, CNN, and Bloomberg spotlight a growing ethical divergence: Kalshi issued refunds on its Khamenei leadership market and blocks war-outcome contracts. Polymarket allowed six-figure war payouts and only removed a nuclear detonation market after public outcry. Lawmakers cite the split as evidence the industry needs clearer rules.
PredictionMarkets.us take: This is the first major visible policy divergence between the two largest platforms. How each handles conflict and mortality markets will shape the regulatory conversation. See our Kalshi vs Polymarket comparison for the full trust breakdown.
The Bloomberg Editorial Board published a formal piece endorsing regulatory intervention against prediction markets — the first board-level establishment media endorsement of the anti-PM framing. This escalates the narrative war beyond politicians into mainstream financial media.
PredictionMarkets.us take: Bloomberg's editorial conflates sports betting with prediction markets. The data tells a different story: 71% of combined Kalshi + Polymarket volume is in non-sports categories (politics, economics, world events). See our volume breakdown for the full fact check.
Market Signal
If the Clarity Act passes, CFTC authority over prediction markets would be codified into law, preempting state gambling lawsuits. This would resolve 18+ state lawsuits in the industry's favor.
Federal legislation, court cases, and state-by-state status — with inline market odds where available.
CFTC Chair
“We will see you in court. The CFTC has exclusive jurisdiction over event contracts.”
The Third Circuit ruled April 6, 2026 for CFTC exclusive jurisdiction over DCM trades. The CFTC has since sued at least nine states — Arizona, Connecticut, Illinois, New York, Wisconsin, Minnesota, Rhode Island, New Mexico, and Kentucky — to defend federal preemption, and published a 267-page Notice of Proposed Rulemaking on June 10, 2026 (comment period closes July 27) governing sports event contracts.
Senator (D-MA)
“These platforms strip states of their authority to regulate gambling disguised as financial products.”
Called for states to retain power to block prediction markets
Former NJ Governor
“This is about the rights of states to regulate within their borders.”
Advocates state-level regulation over federal preemption
Coinbase CEO
“The CFTC has exclusive jurisdiction. Prediction markets are regulated financial products, not gambling.”
Coinbase invested in Polymarket; supports federal regulatory framework
Utah Governor (R)
“Betting on LeBron James rebounds is not a financial product. It is gambling.”
Led coalition of governors opposing CFTC preemption of state gambling laws
Senator (D-CT)
“Americans should not be able to profit from betting on war, death, and human suffering.”
Drafting bill to ban war/mortality event contracts on CFTC-regulated exchanges
Kalshi CEO
“Prediction markets are the most transparent information tools ever built.”
Leading legal defense against 18+ state lawsuits challenging Kalshi markets
Media / Editorial
“Prediction markets are chaotic gambling that needs reining in by regulators.”
First board-level establishment media endorsement of anti-PM regulatory framing
Senate Banking and Agriculture Committee staff merge their versions into a single ~70-page-longer draft emphasizing consumer protections; supporters aim for a Senate floor vote as early as the week of July 20, ahead of the August 7 recess. Polymarket prices 2026 passage around 40–48%, down from ~82% in February. Sen. Ron Wyden (D-OR) backs the bill's developer-protection (BRCA) provisions.
The White House's informal July 4, 2026 signing target for the CLARITY Act passes without a ceremony; the bill remains at Calendar No. 423 with no cloture motion filed. Three disputes — ethics language on officials' crypto holdings, Section 604 developer protections, and stablecoin-yield rules — still block the 7-9 Democratic votes needed for the 60-vote cloture threshold.
North Carolina's legislature includes a 6% revenue tax on prediction markets in its conference budget (SB 257), a comparatively light rate versus the ~23% many states levy on sportsbooks. New Jersey is separately advancing a 9% measure.
Ingham County Circuit Judge Rosemarie Aquilina grants Michigan AG Dana Nessel a temporary restraining order barring Kalshi sports event contracts statewide, with a $120,000-per-day non-compliance fine and a geolocation mandate. Kalshi began blocking Michigan sports users. A preliminary-injunction hearing is set for July 13, 2026. Michigan becomes the third state (with Nevada and Massachusetts) to bar Kalshi sports markets.
CFTC Chair Michael S. Selig (Mike Selig) publishes a 267-page Notice of Proposed Rulemaking that would allow most sports-related event contracts while prohibiting contracts tied to player injuries, officiating decisions, in-game altercations, and youth sports. Public comment period closes July 27, 2026. The American Gaming Association called it "a remarkable attempt to redefine what constitutes sports betting."
Gov. Tim Walz signs SF 4760, making Minnesota the first state to criminalize operating, hosting, or advertising prediction markets — a felony effective August 1, 2026. The CFTC sued within 24 hours; Kalshi filed its own federal suit May 29. A federal judge heard PI arguments July 2; ruling pending.
The Senate Banking Committee advances the Digital Asset Market Clarity Act (H.R. 3633) by a 15-9 vote, with Chairman Tim Scott (R-SC) and Democrats Ruben Gallego (AZ) and Angela Alsobrooks (MD) joining all 13 Republicans. On June 1 the bill is placed on the Senate Legislative Calendar as Calendar No. 423, eligible for a floor vote.
CFTC Division of Market Oversight issues Staff Advisory (Release 9193-26) reminding DCMs of Core Principle 3 obligations, alongside an Advance Notice of Proposed Rulemaking (Release 9194-26) opening a 45-day public comment period on new event-contract rules. Chairman Michael S. Selig (Mike Selig) previewed the rulemaking at the FIA Global Cleared Markets Conference in Boca Raton on March 10; official ANPRM issued March 12 (published in Federal Register March 16, Doc. No. 2026-05105).
Sen. Adam Schiff (D-CA) and Rep. Mike Levin (CA-49) formally introduce the DEATH BETS Act, which would amend the Commodity Exchange Act to prohibit CFTC-registered entities from listing contracts tied to terrorism, assassination, war, or individual death.
CFTC Chair Michael S. Selig (Mike Selig) outlines formal rulemaking agenda for prediction markets, including DeFi and event contract regulations. Signals CFTC won't defer to courts.
| Bill | Sponsor | Status | Risk | Impact |
|---|---|---|---|---|
| End Prediction Market Corruption Act | Sens. Merkley (D-OR) & Klobuchar (D-MN) | Introduced | High | Officials trading ban |
| DEATH BETS Act (Schiff-Levin) | Sen. Adam Schiff (D-CA) & Rep. Mike Levin (CA-49) | Introduced | High | War/mortality markets |
| The Clarity Act | Bipartisan coalition | Active | Positive | Federal preemption |
| Platform | Regulator | Status | Risk | Note |
|---|---|---|---|---|
| Kalshi | CFTC-regulated DCM + DCO (Designated Contract Market and Derivatives Clearing Organization) | Live | Medium | 18+ state lawsuits pending (NV, NJ, MD, MA, MI, OH, CT, TN, NY, UT, AZ, IA, IL, WA, KY, MN, NM, RI, WI + tribal) |
| Polymarket | CFTC DCM via QCX LLC | Live | Medium | QCX LLC d/b/a Polymarket US |
| Interactive Brokers | CFTC DCM + DCO (ForecastEx, operated by Interactive Brokers) | Live | Low | Institutional-grade compliance |
| PredictIt | CFTC No-Action Letter (CFTC Letter 25-20, July 2025 — amended framework via Prediction Market Research Consortium, governed by academic board) | Live | Low | Won case vs CFTC July 2025; continues under no-action letter (Aristotle Exchange DCM/DCO sold to Underdog Mar 9, 2026) |
| FanDuel Predicts | CME Group / CFTC | Live | Low | 18 states, Flutter Entertainment-backed |
| DraftKings Predict | CFTC Introducing Broker + NFA member; launched on CME Group exchange. Gus III LLC (d/b/a DraftKings Predictions) FCM application pending as of Feb 27, 2026. | Live | Low | Super App integration 2026 |
| Robinhood Predict | Via Kalshi (CFTC DCM) | Live | Low | White-label Kalshi markets |
| Crypto.com CDNA | CFTC DCM | Live | Low | Powers Fanatics Markets, Underdog, OG Predictions, Hollywood.com, MyPrize, TruthPredict |
| Sporttrade | State gaming licenses | Live | Medium | State-by-state licensing model |
See full state-by-state availability on the Legal Status page
Five major industry players launched the Coalition for Prediction Markets on December 11, 2025, to promote fair, safe, and open access to regulated prediction markets. The coalition represents a coordinated industry response to state-level challenges and advocates for federal regulatory clarity.
The CFTC and Major League Baseball signed a first-ever Memorandum of Understanding focused on sports integrity for prediction markets (March 19, 2026) — the same day MLB named Polymarket its exclusive prediction market exchange partner. This is the first time the federal derivatives regulator has formally partnered with a professional sports league on integrity oversight.
CFTC Press Release 9199-26The prediction market space is expanding rapidly. Multiple platforms have filed or announced CFTC DCM and DCO applications, seeking to join Kalshi, Polymarket, ForecastEx, and others as regulated exchanges. Here is the current landscape of known pending applicants:
| Platform | Filing / Status | Details |
|---|---|---|
| Sporttrade | DCM + DCO applied | Application posted to CFTC public docket January 27, 2026 (announced February 4, 2026). Currently state-licensed sports exchange in 5 states. Seeking to add federal CFTC layer. |
| ProphetX | DCM + DCO applied | Filed November 10, 2025 for DCM + DCO dual registration. Currently operates as sweepstakes platform. Approval expected in 2026. |
| Novig | DCM applied (Ludlow Exchange LLC) | Ludlow Exchange LLC DCM application pending CFTC (filed January 21, 2026). Novig currently operates as sweepstakes; plans to transition to full CFTC-regulated prediction market. |
| Railbird Exchange (DraftKings) | DCM approved (integration pending) | Railbird Exchange LLC already holds CFTC DCM license (approved June 2025). Acquired by DraftKings October 21, 2025. DCM integration announced March 2, 2026; not yet live. |
| Rothera (Robinhood + SIG) | DCM + DCO registered | Rothera LLC (JV between Robinhood Markets and SIG) holds CFTC DCM and DCO registrations (acquired via MIAXdx). Exchange expected to launch Q2 2026. |
| Gemini Titan LLC | DCM approved Dec 10, 2025 | CFTC designated Gemini Titan LLC as DCM on December 10, 2025 under Acting Chair Caroline Pham. Also received CFTC no-action letter December 11, 2025. |
| Betr Predictions LLC | IB application pending | NFA IB application pending since October 2025. Multi-year partnership with Polymarket announced March 4, 2026. Will embed Polymarket event contracts in Betr super app (1M paying users). |
| Smarkets | Seeking DCM | UK-based exchange exploring CFTC DCM application to enter the U.S. regulated prediction market space. |
| tZERO | Seeking DCM | Digital securities platform exploring CFTC DCM application for prediction markets. |
| PMEX Markets | DCM + DCO applied | Filed DCM application February 9, 2026 and paired DCO application same day. Source: CFTC docket. |
| DimeTrades (PredictCraft Mkt Inc.) | DCM applied | Filed DCM application February 11, 2026. Source: CFTC docket ID 59756. |
| XV Exchange / STX | DCM + DCO applied | Filed DCM application December 9, 2025; paired DCO (XV Clearing) filed February 27, 2026. Source: CFTC docket ID 58807. |
| Water Street Labs | DCM applied | Filed DCM application January 22, 2026. Source: CFTC docket ID 59469. |
| Juice Exchange | DCM applied | Filed DCM application January 27, 2026. Source: CFTC docket ID 59480. |
| Optex Markets | DCM applied | Filed DCM application January 13, 2026. Source: CFTC docket ID 59349. |
| OneChronos Markets | DCM applied | Filed DCM application July 31, 2025. Source: CFTC docket ID 57746. |
| RSBIX (Matchbook) | DCM applied | Filed DCM application September 16, 2025. UK-based Matchbook betting exchange seeking US regulatory foothold. Source: CFTC docket ID 58152. |
The CFTC ANPRM (March 12, 2026, RIN 3038-AF65) opened a 45-day public comment period due April 30, 2026 — which will shape the rulemaking environment for all pending applications. Source: Federal Register Doc. 2026-05105.
The Commodity Futures Trading Commission (CFTC) is the primary federal regulator for prediction markets. Chair Michael S. Selig (Mike Selig) has taken an aggressively pro-PM stance, filing an amicus brief asserting exclusive federal jurisdiction — directly challenging 18+ state lawsuits, with 38 states filing amicus briefs supporting state authority.
What to watch: Clarity Act vote timeline, 9th Circuit emergency appeal ruling on Nevada case, CFTC Commissioner confirmation hearings, and any formal rulemaking on war/terrorism contract categories. Also watch: pending DCM applications for Sporttrade, ProphetX, Novig, Railbird (DraftKings), and Rothera (Robinhood) — each approval adds a new regulated exchange and expands the legal market.
CFTC-regulated exchanges must hold customer funds in segregated accounts. Your deposits are separate from company operating capital.
If the DEATH BETS Act passes, war/mortality markets would be delisted. Your existing positions would be settled at current prices. Non-war markets (politics, economics, sports) would be unaffected.
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