Commodity Futures Trading Commission (CFTC) has scored an early victory in its battle with some states challenging federal oversight of prediction markets.
A group of different states are pursuing prediction markets like Kalshi and Polymarket, arguing that these markets should be regulated by state gaming rules.
Concerned about a mess of national rules that would result in innovations being squashed in their infancy, the CFTC recently announced it would sue those states.
The CFTC Chairman said in a post published today on X Mike Selig Announced the approval of its regulatory authority in the state of New Jersey.
Today’s decision by the Third Circuit Court of Appeals reaffirms Congress’ intent on this matter. @CFTC Having exclusive regulatory jurisdiction over transactions in DCMs. I applaud the court’s decision to uphold the federal law and reject this initiative by the New Jersey Anti-Gambling Agency…
— Mike Selig (@PresidentSelig) April 6, 2026
Designated Contract Markets or DCMS, represents CFTC-regulated swaps that have economic consequences. In this case, they are event markets where individuals place bets on potential outcomes that have a financial aspect. The decision in New Jersey was the first decision won on federal appeal on a preemption issue.
While a battle victory doesn’t mean the fight is over, the win strengthens the CFTC’s legal argument as it challenges Arizona, Illinois and other states that disliked the federal government’s decision to include prediction markets in their oversight portfolio.
