CFTC Sued 9 States Over Prediction Markets, Analyst Says It's Sovereignty Issue
Policy analyst Amanda Fischer says prediction market firms are bypassing hard-won state and tribal gambling laws, as the CFTC faces more than 20 active lawsuits nationwide.
A 14-Year-Old Rule and a Whole Lot of Lawsuits
Amanda Fischer has a blunt way of describing how prediction market companies approach regulation. “These folks just parachute in and think that by slapping some tech on a product, they can evade all the laws,” Fischer said Wednesday during the Indian Gaming Association’s New Normal webinar, as reported by CDC Gaming.
Fischer, currently chief operating officer and policy director of Better Markets, previously served as chief of staff to SEC Chairman Gary Gensler during the Biden administration. She has been one of the more consistent critics of the Commodity Futures Trading Commission’s posture on prediction markets, and her argument is straightforward: this is a sovereignty issue.
“We have long-standing state and tribal gambling laws that have been hard fought,” she said. The concern is that those laws, built up over decades through negotiations between federal agencies, states, and tribal nations, are being bypassed by prediction market firms who chose to seek forgiveness rather than permission.
The CFTC has now sued nine states over their efforts to regulate or restrict prediction markets, including Arizona, Illinois, Kentucky, Utah, Connecticut, and New York. More than 20 lawsuits are currently active between state gaming regulators, tribal organizations, and the prediction market companies themselves. That is not a regulatory gray area so much as a full-scale legal war.
Nevada Wants $120,000 a Day
The situation in Nevada is particularly pointed. The Nevada Gaming Control Board has gone to court arguing that Kalshi, one of the most prominent prediction market platforms, has not fully vacated the state despite a preliminary injunction requiring it to do so. The board is seeking fines of $120,000 per day for noncompliance.
In Utah, a federal judge ruled this month that the state can enforce its strict anti-gambling laws against Kalshi and other prediction market operators. New York is handling things differently. The state is pushing a $36 billion lawsuit, and the CFTC responded by invoking emergency powers to keep Kalshi operating while the case proceeds. Fischer’s reading of that maneuver is not charitable.
The Rule Rewrite Nobody Asked For
At the center of Fischer’s critique is the CFTC’s June notice of proposed rulemaking, which would amend Rule 40.11. That rule, in place for 14 years, bans certain event contracts from being listed on registered exchanges, specifically those involving terrorism, assassination, war, gaming, or activity unlawful under federal or state law and contrary to the public interest.
Fischer’s description of the agency’s strategy was vivid. “So you know what we’ll do? We’ll try to amend that rule that’s been in place for 14 years to try to basically do jazz hands at the court, and say, ‘No, no, no, we’re actually just clarifying that prediction markets aren’t breaking the law right now,’” she said during the webinar.
She described the CFTC under Chairman Michael Selig as having stepped directly into state litigation on the side of prediction markets, a posture she frames as politically motivated. Prediction market companies, she argued, are racing to entrench their business model before the midterms this November and before the end of President Trump’s term, knowing that future Congresses or regulators might take a harder line.
Tribal Voices Are Getting Through
Despite all of this, Fischer offered something close to encouragement for the IGA’s audience. She said the Indian Gaming Association and allied groups are making a real difference in slowing the prediction market industry’s momentum in Congress and in the courts.
“They’re having to pivot, they’re doing increasingly novel, strange gambits in court and through the rule-making apparatus to try to just grab at anything they can,” she said of Kalshi and its peers. The fact that prediction market companies are pivoting at all, in Fischer’s view, is evidence that the IGA and state regulators are “stepping up and explaining how this misconduct affects their constituents.”
With more than 20 active lawsuits and a federal agency using emergency powers to shield a private company from a $36 billion state claim, the question of who actually governs gambling in the United States is very much unsettled.
Why are prediction markets in legal trouble with states?
States and tribal organizations argue that prediction markets like Kalshi are operating as gambling businesses without complying with long-standing state and tribal gaming laws. The CFTC has sued nine states, including Arizona, Illinois, Kentucky, Utah, Connecticut, and New York, over their attempts to regulate or ban these products.
What is the CFTC proposing to do about prediction markets?
In June 2026, the CFTC issued a notice of proposed rulemaking that would amend Rule 40.11, which currently bans certain event contracts from being listed on registered exchanges. Critics say the agency is trying to reinterpret a 14-year-old rule to effectively legalize prediction markets by claiming the original rule was not clear enough.
What happened with Kalshi in Nevada and New York?
In Nevada, the Gaming Control Board is seeking $120,000 per day in penalties from Kalshi for allegedly failing to fully comply with a preliminary injunction. In New York, the CFTC invoked emergency powers to keep Kalshi operating despite a $36 billion state lawsuit against the company.
Who is Amanda Fischer and what is her criticism?
Amanda Fischer is the chief operating officer and policy director of Better Markets and a former chief of staff to SEC Chairman Gary Gensler during the Biden administration. She argues that prediction market firms are using regulatory and legal maneuvers to lock in favorable treatment before the midterms and the end of President Trump's term, rather than persuading lawmakers through proper channels.