Tracking Every Prediction Market Lawsuit Involving Kalshi, Polymarket & Other Operators

Prediction markets like Kalshi and Polymarket have exploded in popularity, processing billions in weekly volume on sports, politics, and current events. But behind the surge is an unprecedented legal war: more than 30 active court cases that we can find, spanning federal preemption battles, state enforcement actions, tribal gaming disputes, consumer class action suits, criminal charges, and even claims under a 300-year-old British gambling statute.

The central question in nearly every case is whether prediction markets are federally regulated financial instruments or unlicensed gambling.

This tracker covers more than 30 lawsuits and bills we can find involving prediction markets like Kalshi, Coinbase, Robinhood and Polymarket as of April 9, 2026, with case statuses, upcoming court dates, and analysis of what the outcomes mean for users of those platforms.

This tracker is updated regularly as new filings, hearings, and rulings occur. We try to catch everything, but reach out to spetrella@bettercollective.com if there's anything we missed. Last updated: April 9, 2026.

Key Takeaways

The core legal question: Does the federal Commodity Exchange Act (CEA) preempt state gambling laws when it comes to event contracts traded on Commodity Futures Trading Commission (CFTC) regulated exchanges? If yes, platforms like Kalshi and Polymarket can operate nationwide, in all 50 states, under one set of federal rules. If not, they need individual state gambling licenses — and could be banned in states that haven't legalized sports betting.

The 3rd Circuit just ruled for Kalshi, the first federal appeals court to weigh in. On April 7, the 3rd Circuit Court of Appeals ruled 2-1 that New Jersey cannot regulate Kalshi's sports event contracts because the CFTC has exclusive jurisdiction. Judge David Porter wrote that "Kalshi's sports-related event contracts are swaps traded on a CFTC-licensed DCM, so the CFTC has exclusive jurisdiction." The dissent, from Judge Jane Richards Roth, called Kalshi's offerings "virtually indistinguishable from the betting products available on online sportsbooks, such as DraftKings and FanDuel." This ruling — the first by any federal appeals court — gives Kalshi powerful precedent heading into the 9th Circuit's April 16 oral arguments. Kalshi CEO Tarek Mansour called it "a big win for the industry."

The CFTC sued three states. On April 2, the CFTC and DOJ sued Arizona, Connecticut, and Illinois in federal court, challenging their efforts to regulate prediction markets. This is the first time the federal government has sued states over prediction markets. Connecticut AG William Tong accused the Trump administration of "recycling industry arguments" rejected in district courts across the country. An Illinois spokesperson said "the Trump Administration is carrying water for companies driving well-documented and lucrative insider-trading schemes."

Nevada granted a preliminary injunction against Kalshi. On April 4, Nevada Judge Jason Woodbury said he will grant a full preliminary injunction against Kalshi, extending the TRO through April 17 while the language is finalized. Woodbury called sports betting and sports contract trading "indistinguishable." Kalshi is complying — it is the only state with an active, court-enforced ban. Kalshi told customers: "We disagree with those restrictions, but as a law-abiding company, we're following them." The 9th Circuit oral arguments on April 16 will be the most consequential hearing yet.

Arizona filed criminal charges. On March 17, 2026, Arizona Attorney General Kristin Mayes filed 20 criminal misdemeanor charges against both KalshiEX LLC and Kalshi Trading LLC for "betting and wagering" and "election wagering." These are the first criminal charges ever filed against a prediction market in the United States. The CFTC subsequently sued Arizona (Apr 2) to block the state's enforcement. A federal judge in Arizona heard arguments on Kalshi's motion to dismiss the charges on April 4.

Congress is moving on bipartisan legislation. On March 23, Senators Adam Schiff (D-CA) and John Curtis (R-UT) introduced the "Prediction Markets Are Gambling Act," the first bipartisan Senate bill targeting prediction markets. It would ban CFTC-registered entities from listing sports contracts or casino-style games and create a state opt-out pathway. A separate bipartisan House bill — the "Event Contract Enforcement Act" — and the PREDICT Act (banning Congressional trading) are also pending. Senators Schiff and Curtis said on CNBC they believe the bill has enough bipartisan support to pass both chambers.

Washington state joined the fight. Washington AG Nick Brown sued Kalshi on March 28, calling the company "just a bookie with a fancy name." The complaint noted Kalshi uses its own affiliate to take the other side of bets when there aren't enough participants. Robinhood separately sued Washington state preemptively.

The scorecard is splitting at the appellate level. The 3rd Circuit ruled for Kalshi on April 7. But at the trial court level, Kalshi has lost in Maryland, Nevada, Massachusetts, Ohio, and faces criminal charges in Arizona. The 9th Circuit hears arguments April 16 — if it sides with states, a circuit split with the 3rd Circuit would almost certainly trigger Supreme Court review.

Sports are the battleground. About 90% of Kalshi's trading volume comes from sports-related event contracts. Kalshi said it processed more than $1 billion in volume on the Super Bowl alone, and lifetime sports volume has reached $16.8 billion — more than double Nevada's entire 2025 sports betting handle of $8 billion. State gaming regulators see these as unlicensed sports bets, not financial derivatives, like the platforms argue.

Insider trading concerns are intensifying. Polymarket has faced intense scrutiny after users made profitable bets appearing to anticipate U.S. military action in Iran and Venezuela. An Israeli military reservist was indicted for exploiting classified information on Polymarket. On March 23, both Kalshi and Polymarket announced new insider trading guardrails — Kalshi will preemptively block politicians, athletes, and coaches from trading on relevant markets, while Polymarket banned anyone who "can influence the outcomes" of events. Senators Schiff and Curtis called the measures insufficient. House Democrats have called on the CFTC to crack down on offshore prediction market war bets.

The political backdrop matters. The Trump administration's CFTC has been favorable to prediction markets, dropping the original appeal against Kalshi, filing amicus briefs in multiple cases, and now suing states directly. CFTC Chair Michael Selig said on CNBC: "What we're seeing is an attempt by the state gaming commissions to effectively nullify federal law." But state regulators, tribal governments, state attorneys general, and a bipartisan group of senators are pushing back hard — now with criminal charges and legislation. Donald Trump Jr. is a strategic advisor to Kalshi and Polymarket.

Upcoming Court Dates

These are the hearings and deadlines that will shape prediction market legality in the coming months. We'll update this section as dates are confirmed.

Federal Preemption Scorecard

The central legal issue in virtually every case is whether federal law preempts state gambling regulation of prediction markets. Here's how courts have ruled so far:

Running tally: At the appellate level, Kalshi won the first federal appeals court ruling when the 3rd Circuit sided with it 2-1 on April 7. At the trial court level, Kalshi has won in D.C., New Jersey, California, and Tennessee, but lost in Maryland, Nevada, Massachusetts, Ohio, and faces criminal charges in Arizona. Washington state sued Kalshi on March 28. Every state-court action against Kalshi has resulted in a win for regulators. The 9th Circuit hearing on April 16 could create a circuit split with the 3rd Circuit or align with it — either outcome would be enormous. The 4th Circuit Maryland hearing in May adds another data point.

On Feb. 18, the CFTC filed its first-ever amicus brief in a prediction market case. On April 2, the CFTC went further, suing Arizona, Connecticut, and Illinois directly — the first time the federal government has sued states over prediction markets.

3rd Circuit Rules for Kalshi — First Federal Appeals Court Decision (Apr. 7, 2026)

On April 7, the 3rd Circuit Court of Appeals ruled 2-1 that New Jersey cannot regulate Kalshi's sports event contracts because the CFTC has exclusive jurisdiction. This is the first federal appeals court to rule on the central prediction market question — and Kalshi won.

Judge David Porter wrote for the majority that "Kalshi's sports-related event contracts are swaps traded on a CFTC-licensed DCM, so the CFTC has exclusive jurisdiction." The court found both "field preemption" (the CEA occupies the entire field of DCM regulation) and "conflict preemption" (state law conflicts with federal requirements) apply. Porter wrote: "New Jersey frames the issue broadly (regulating all sports gambling) rather than narrowly (regulating trading on federally designated contract markets). The text of the Act suggests that the narrow framing is the better reading."

Judge Jane Richards Roth dissented sharply, writing: "I see Kalshi's actions as a performative sleight meant to obscure the reality that Kalshi's products are sports gambling. These offerings are virtually indistinguishable from the betting products available on online sportsbooks, such as DraftKings and FanDuel."

New Jersey AG Jennifer Davenport said her office is "evaluating its options" and could seek en banc rehearing before the full 3rd Circuit.

This ruling lands less than two weeks before the 9th Circuit hears arguments in the Nevada cases on April 16. Kalshi will certainly cite the 3rd Circuit opinion. If the 9th Circuit disagrees, it would create the circuit split that typically triggers Supreme Court review. CFTC Chair Selig praised the decision, calling it a vindication of "federal law."

CFTC Sues Three States (Apr. 2, 2026)

On April 2, the CFTC and DOJ sued Arizona, Connecticut, and Illinois in federal court — the first time the federal government has sued states over prediction market regulation. The lawsuits contend that the CFTC has exclusive jurisdiction over event contracts traded on designated contract markets and that state cease-and-desist orders and enforcement actions infringe on federal authority.

All three states had sent cease-and-desist orders to prediction market companies. Arizona had also filed criminal charges against Kalshi.

Connecticut AG William Tong responded: "These contracts are plainly unlicensed illegal gambling under time-worn state law, and we will aggressively defend Connecticut's commonsense consumer protection laws." He accused the Trump administration of "recycling industry arguments."

An Illinois spokesperson said: "The Trump Administration is carrying water for companies driving well-documented and lucrative insider-trading schemes." DePaul law professor Karl Lockhart said the lawsuits increase the likelihood the Supreme Court will take up the matter soon, quoting Justice Scalia: "Congress doesn't hide elephants in mouseholes."

The CFTC's action signals a dramatic escalation — the federal government is no longer just filing amicus briefs on behalf of prediction markets, but actively suing states to protect them.

Arizona Files Criminal Charges (Mar. 17, 2026)

Arizona Attorney General Kristin Mayes filed 20 criminal misdemeanor charges against both KalshiEX LLC and Kalshi Trading LLC on March 17, 2026 — the first criminal charges ever filed against a prediction market company.

The charges, filed in Maricopa County Superior Court (Case No. CR 2024-000173-001/002), include:

• Counts 1–9, 11, 13–17, 20: Betting and Wagering — Class 1 misdemeanors under A.R.S. § 13-3305(A)(1)
• Counts 10, 12, 18, 19: Election Wagering — Class 2 misdemeanors

The charges reference specific transactions: a $30 bet on whether the Washington Commanders would beat the New York Giants (Dec. 14, 2025), a $2 bet on whether a Republican would win the 2026 Arizona governor's race, and multiple sports and election bets from February 2026.

The criminal charges came just four days after Kalshi preemptively sued Arizona in federal court (Mar. 13), seeking a preliminary injunction from Judge Michael Liburdi. On April 2, the CFTC sued Arizona to block the state's enforcement. On April 4, Judge Liburdi heard arguments on Kalshi's motion.

Kalshi vs. CFTC: The Original Case

Everything starts here. In 2023, the CFTC rejected Kalshi's proposal to offer "Congressional Control Contracts" — event contracts that let users bet on which party would control Congress. The CFTC argued these constituted illegal "gaming."

Kalshi sued and in September 2024, a D.C. District Court judge ruled in Kalshi's favor, finding that election contracts are not "gaming" under the CEA. The CFTC sought a stay pending appeal, but the D.C. Circuit denied it. Kalshi launched election betting for the 2024 cycle.

After Trump took office, the CFTC dropped its appeal entirely in May 2025. The D.C. ruling stands as the industry's foundational legal victory — one that former CFTC officials have called the prediction market industry's "rocket booster."

Case: KalshiEX LLC v. CFTC, No. 24-5205 (D.C. Cir.)
Status: Resolved. Kalshi won. CFTC dropped the appeal.

This ruling gave Kalshi the legal confidence to expand aggressively into sports contracts in early 2025 — which triggered everything that followed.

Kalshi vs. State Regulators

After Kalshi began offering sports event contracts in January 2025, state gaming regulators responded with cease-and-desist letters. Kalshi went on offense, suing regulators in federal court and arguing that the CEA grants the CFTC exclusive jurisdiction. Here's where each case stands.

Nevada

Case: KalshiEX v. Hendrick, No. 2:25-cv-00575 (D. Nev.) → 9th Circuit (25-7516)
Judge: Andrew P. Gordon (Obama appointee)

Nevada was the first and most closely watched battleground. The Nevada Gaming Control Board issued a cease-and-desist in March 2025. Kalshi sued and won a preliminary injunction in April 2025, with a judge finding that the CEA preempts state gaming laws.

But the tide turned. Gordon allowed the Nevada Resort Association — representing the state's casino industry — to intervene. In November 2025, he reversed himself and dissolved the injunction, writing that Kalshi's interpretation of the CEA would "upset decades of federalism regarding gaming regulation."

Kalshi appealed to the 9th Circuit. On Feb. 18, 2026, the 9th Circuit denied Kalshi's emergency motion for an administrative stay. Within hours, the Nevada Gaming Control Board filed a new civil enforcement action in Carson City District Court. Kalshi removed the case to federal court.

On March 2, Judge Miranda Du remanded both the Kalshi and Polymarket Nevada enforcement cases back to state court. On March 19, the 9th Circuit denied Kalshi's emergency stay. On March 21, a Nevada state court issued a 14-day TRO against Kalshi, blocking sports, politics, and entertainment contracts — the first time Kalshi has been ordered to cease operations in a state where it was actively operating. Kalshi is complying.

On April 4, Judge Jason Woodbury announced he will grant a full preliminary injunction requested by the NGCB. He extended the TRO through April 17 while the injunction language is finalized, calling sports betting and sports contract trading "indistinguishable." Gaming attorney Daniel Wallach noted that Nevada is now the only state with a court-enforced, in-effect ban against Kalshi.

The 9th Circuit oral arguments for Kalshi, Robinhood, and Crypto.com are scheduled for April 16, 2026 — one day before the TRO expires. The CFTC has filed amicus briefs in support. The 3rd Circuit's April 7 ruling for Kalshi gives the platforms powerful new precedent to cite.

New Jersey

Case: KalshiEX v. Flaherty, No. 1:25-cv-02152 (D.N.J.) → 3rd Circuit (25-1922)
Judge: Edward S. Kiel (Biden appointee)

Judge Kiel granted Kalshi's preliminary injunction in April 2025, agreeing that federal law preempts state gaming enforcement. New Jersey appealed to the 3rd Circuit. Oral arguments were held on September 10, 2025.

On April 7, 2026, the 3rd Circuit ruled 2-1 in favor of Kalshi, upholding the injunction. Judge Porter wrote that sports contracts are "swaps traded on a CFTC-licensed DCM" subject to exclusive federal jurisdiction. Judge Roth dissented, calling the contracts "virtually indistinguishable" from DraftKings and FanDuel. See the dedicated section above for full details.

NJ AG Jennifer Davenport said her office is evaluating its options and could seek en banc rehearing. Notably, 34 state attorneys general had filed an amicus brief in support of New Jersey.

Maryland

Case: KalshiEX v. Martin (D. Md.) → 4th Circuit
Judge: Adam B. Abelson

Maryland was the first federal court to side with state regulators. Judge Abelson denied Kalshi's preliminary injunction in August 2025, finding that the CEA does not displace state authority over gambling.

Kalshi appealed to the 4th Circuit. Neal Katyal, the former acting Solicitor General, is representing Kalshi. Oral arguments are tentatively scheduled for May 5–8, 2026. If the 4th Circuit sides with Maryland (contradicting the 3rd Circuit), it would create the circuit split that triggers Supreme Court review.

Ohio, New York, Connecticut, Tennessee, Utah, Iowa, Arizona, Washington

Kalshi has also filed federal preemption suits against regulators in:

• Ohio Casino Control Commission — Kalshi's PI was denied in early March. Judge Sarah Morrison ruled that the CEA's definition of "swaps" does not extend to sports contracts.
• New York State Gaming Commission — Filed Oct 2025 after NYSGC issued a C&D. New York agreed not to enforce while the court rules.
• Connecticut DCP — Filed Dec 2025. Oral arguments held Feb 11, 2026. Awaiting ruling. CFTC sued Connecticut on Apr 2 to block enforcement.
• Tennessee — On Feb. 19, Judge Aleta Trauger granted Kalshi a preliminary injunction, ruling that sports event contracts qualify as "swaps" under the CEA. $500,000 bond required.
• Utah — Filed Feb. 23, 2026 preemptively. Governor Cox has since signed HB243 into law, banning proposition-style wagers.
• Iowa — Filed Mar. 11, 2026 preemptively against AG Brenna Bird and Iowa Racing & Gaming Commission.
• Arizona — Filed Mar. 13, 2026. Four days later, Arizona filed criminal charges. CFTC sued Arizona on Apr 2. Federal judge heard arguments Apr 4.
• Washington — Washington AG Nick Brown sued Kalshi on Mar 28, calling the company "just a bookie with a fancy name." Kalshi removed to federal court in Seattle. Robinhood separately sued Washington state.

States & Tribes Suing Kalshi

While most state-vs-Kalshi cases were initiated by Kalshi suing regulators, a growing number of states and tribal governments have gone on offense.

Arizona Attorney General v. Kalshi (Criminal — Mar. 17, 2026)

Case: State of Arizona v. KalshiEX LLC & Kalshi Trading LLC (Maricopa County Superior Court, Case No. CR 2024-000173-001/002)

The first criminal charges ever filed against a prediction market. See the dedicated section above for full details. The CFTC sued Arizona on April 2 to block enforcement.

Washington Attorney General v. Kalshi (Mar. 28, 2026)

Case: State of Washington v. KalshiEX (King County Superior Court → removed to W.D. Wash.)

Washington AG Nick Brown sued Kalshi on March 28, seeking to halt its operations in the state. Brown called Kalshi "just a bookie with a fancy name." The complaint noted that Kalshi uses its own affiliate to place wagers when there aren't enough participants, meaning users don't know if they're betting against another person or the company. Kalshi removed the case to federal court in Seattle. Separately, Robinhood sued Washington state preemptively, arguing federal law preempts Washington's internet gambling prohibition.

Massachusetts Attorney General v. Kalshi

Case: Commonwealth v. KalshiEX (Suffolk County Superior Court)
Judge: Christopher K. Barry-Smith

Massachusetts AG Andrea Campbell filed suit in September 2025, the first state to proactively sue a prediction market. In January 2026, Judge Barry-Smith granted a preliminary injunction barring Kalshi from offering sports contracts in Massachusetts. On Feb. 18, a Massachusetts Appeals Court granted Kalshi an emergency stay, putting the geofencing order on hold while Kalshi's appeal proceeds.

Nevada Gaming Control Board v. Kalshi

Case: NGCB v. KalshiEX (Carson City District Court → removed to D. Nev. → remanded back to state court Mar 2)

On March 21, a Nevada state court issued a 14-day TRO. On April 4, Judge Woodbury announced he will grant a full PI, extending the TRO through April 17. Kalshi is shut down in Nevada and complying. Nevada is the only state with an active, court-enforced ban.

California Tribes v. Kalshi & Robinhood

Case: Blue Lake Rancheria et al. v. Kalshi, No. 1:25-cv-06162 (N.D. Cal.) → 9th Circuit

Three California tribes sued in July 2025. Judge Corley denied the tribes' preliminary injunction in November 2025. The tribes have appealed to the 9th Circuit.

Ho-Chunk Nation v. Kalshi & Robinhood (Wisconsin)

Case: Ho-Chunk Nation v. Kalshi (W.D. Wis.)

The Ho-Chunk Nation sued in August 2025, alleging Kalshi violates IGRA and racketeering laws. Trial deadlines are scheduled through 2027.

Kalshi Class Action Lawsuits

A wave of consumer class actions has opened a new front, alleging Kalshi operates as an illegal, unlicensed sportsbook and misled users about how the platform works.

New York Class Actions (Consolidating)

Three separate class action lawsuits were filed in the Southern District of New York:

• Yee v. Kalshi — Filed Oct 2025. Nationwide class action. The first class action against any prediction market.
• Pelayo v. Kalshi (No. 1:25-cv-09913) — Filed Nov 2025. Represented by Lieff Cabraser Heimann & Bernstein, a powerhouse class action firm.
• Hallman v. KalshiEX (No. 1:26-cv-00317) — Filed Jan 2026.

All three are being consolidated before a single judge. A consolidated complaint was due March 24, 2026.

The core allegations: Kalshi markets itself as a peer-to-peer exchange, but its affiliated trading arm (Kalshi Trading LLC) acts as a market maker — meaning users are often betting "against the house." Plaintiffs argue this makes Kalshi indistinguishable from a traditional sportsbook.

Other Kalshi Class Actions

• Josephson v. Kalshi (N.D. Ill., No. 1:26-cv-00220) — Filed Jan 8, 2026. Illinois residents alleging illegal gambling.
• Alabama class action v. Kalshi — Filed Jan 29, 2026.
• Oregon class action v. Kalshi — Filed Feb 20, 2026. Plaintiffs seek double damages under Oregon's loss recovery statute.

Statute of Anne Cases

The Statute of Anne is an 18th-century British gambling law that many U.S. states adopted and still have on the books. It allows a person who loses money in an illegal gambling transaction to sue the winner — or the gambling operator — to recover those losses.

A litigation funder called Veridis Management LLC has filed Statute of Anne claims against Kalshi in six states: Ohio, Kentucky, Illinois, Massachusetts, South Carolina, and Georgia. Separately, Illinois attorney Mark Lavery has filed qui tam claims against both Kalshi and Coinbase.

Polymarket: CFTC Settlement & FBI Investigation

Polymarket's legal history is different from Kalshi's. The crypto-native prediction market started in 2020 and ran afoul of regulators almost immediately.

2022 CFTC Settlement

In January 2022, the CFTC ordered Polymarket to cease and desist and pay a $1.4 million penalty. Polymarket blocked U.S. users.

2024 FBI Raid & DOJ Investigation

On November 13, 2024, the FBI raided CEO Shayne Coplan's Manhattan apartment. In July 2025, both the DOJ and CFTC formally closed their investigations without charges.

U.S. Relaunch

Polymarket acquired CFTC-licensed derivatives exchange QCEX for $112 million in July 2025, received amended CFTC approval in November 2025, and relaunched in the U.S. on December 2, 2025, to limited users.

Polymarket Lawsuits

Nevada Enforcement Action

Case: NGCB v. Blockratize (Carson City District → D. Nev. → remanded to state court Mar 2)

Polymarket has been blocked in Nevada since January 29, 2026 via a TRO.

Polymarket v. Massachusetts

Case: QCX LLC v. Campbell, No. 1:26-cv-10651 (D. Mass.)

Polymarket preemptively sued the Massachusetts AG on February 9, 2026.

Consumer Class Actions

• Miro San Diego v. Blockratize (S.D.N.Y.) — Filed Feb 4, 2026. Nationwide class action.
• Yoon v. Polymarket (S.D.N.Y.) — Filed Feb 12, 2026.
• Additional NY class action — Filed Feb 11, 2026.

Related Prediction Market Cases

Robinhood

Robinhood launched a Prediction Market Hub through a Kalshi partnership in 2025. Its appeal is consolidated with Kalshi's at the 9th Circuit (oral args April 16, 2026). Robinhood also sued Washington state preemptively in early April after the WA AG sued Kalshi.

Coinbase

Coinbase sued regulators in Connecticut, Michigan, and Illinois. Nevada's Gaming Control Board sued Coinbase in state court in February 2026.

Crypto.com

Crypto.com sued Nevada in June 2025. Its appeal will be heard alongside Kalshi's and Robinhood's on April 16. The CFTC filed an amicus brief in support. A consumer class action was filed against Crypto.com in Florida on Feb. 13, 2026.

Sleeper Markets

Sleeper Markets LLC sued the CFTC itself, accusing the agency of intentionally delaying its DCM application.

CFTC's Escalating Role

The CFTC's involvement has escalated dramatically in 2026:

February 18: Filed its first-ever amicus brief in a prediction market case, backing Crypto.com in the 9th Circuit.

February 25: Division of Enforcement issued an advisory after Kalshi's insider trading actions, asserting "full authority to police illegal trading practices occurring on any DCM."

March 12: Division of Market Oversight issued a new advisory regarding event contract listings.

April 2: Sued Arizona, Connecticut, and Illinois directly — the first time the federal government has sued states over prediction markets. See the dedicated section above.

CFTC Chair Michael Selig has also withdrawn the 2024 proposed rule restricting event contracts and pulled a 2025 staff advisory cautioning about sports contracts. On CNBC on April 7, Selig said: "What we're seeing is an attempt by the state gaming commissions to effectively nullify federal law."

The Coalition for Prediction Markets — which includes Kalshi, Crypto.com, Coinbase, Robinhood, and Underdog — launched a seven-figure advocacy campaign. Kalshi opened a D.C. lobbying office. The CFTC signed a memorandum of understanding with Major League Baseball, announced alongside MLB's partnership with Polymarket.

Cease-and-Desist Actions & State Warnings

Cease-and-Desist Letters to Prediction Markets

• Nevada Gaming Control Board — March 2025 (Kalshi); January 2026 (Polymarket)
• Illinois Gaming Board — April 2025 (Kalshi); January 2026 (Polymarket). CFTC sued Illinois Apr 2.
• Montana Gambling Control Division — March 2025
• Arizona Gaming Department — May 2025 (escalated to criminal charges Mar 2026; CFTC sued AZ Apr 2)
• Tennessee Sports Wagering Council — January 2026 (Polymarket, Kalshi, Crypto.com)
• Connecticut DCP — December 2025 (Polymarket, Kalshi, Robinhood, Crypto.com). CFTC sued CT Apr 2.
• Washington State Gambling Commission — December 2025 guidance. AG sued Kalshi Mar 28.

States Warning Licensed Operators

• Ohio Casino Control Commission (Aug 2025)
• Arizona Gaming Department (Sep 2025) — Moved to revoke Underdog's fantasy sports license in Dec 2025
• Michigan Gaming Control Board (Oct 2025)
• Nevada Gaming Control Board (Oct & Nov 2025) — FanDuel surrendered its NV license; DraftKings pulled applications
• Illinois Gaming Board (Oct 2025)
• Massachusetts Gaming Commission (Nov 2025)
• Maryland Lottery & Gaming Commission (Nov 2025)
• Louisiana Gaming Control Board (Dec 2025)

Congressional Legislation

Multiple bills targeting prediction markets are now pending in Congress:

• Prediction Markets Are Gambling Act (Senate, Mar 23) — Sens. Schiff (D-CA) and Curtis (R-UT), with Cortez Masto (D-NV). First bipartisan Senate bill. Would ban CFTC-registered entities from listing sports contracts or casino-style games. Creates a state opt-out pathway.
• Event Contract Enforcement Act (House, Mar 6) — Reps. Moore (R-UT) and Carbajal (D-CA). Would require the CFTC to enforce prohibitions on contracts involving terrorism, assassination, war, gaming, and elections.
• Fair Markets and Sports Integrity Act (House, Feb 11) — Rep. Dina Titus (NV). HB 7477 would amend the CEA to prohibit sports event contracts.
• PREDICT Act (House, Mar 25) — Rep. Budzinski. Would ban members of Congress and staff from trading on politics and government contracts.

What This Means for Bettors

If you're using Kalshi or Polymarket to bet on sports, here's what the legal landscape means for you right now.

Can I still use Kalshi and Polymarket? In most states, yes. Nevada is the only state with an active, court-enforced ban — Kalshi has been blocked from offering sports, politics, and entertainment contracts there since March 20 and is complying. The 3rd Circuit ruled on April 7 that New Jersey cannot regulate Kalshi. Arizona has criminal charges pending but no injunction yet. The 9th Circuit hears arguments April 16, which could expand or contract Kalshi's operating territory significantly.

What if my state bans prediction markets? If a court orders geofencing in your state, you would lose access to trading — depending on the state it could be just sports, or could be everything. Nevada's ban covers sports, politics, and entertainment contracts. Arizona's criminal charges include election wagering.

Is my money safe? Both Kalshi and Polymarket are CFTC-regulated designated contract markets. Customer funds are held in segregated accounts with clearing requirements. However, the class action lawsuits allege users may not realize they're betting against the house. Both platforms announced new insider trading guardrails on March 23.

Could prediction markets be banned nationwide? The picture is mixed. The 3rd Circuit's April 7 ruling and the CFTC suing three states signal strong federal support for prediction markets. But Congress is moving in the opposite direction with bipartisan legislation. If the 9th Circuit disagrees with the 3rd Circuit, a Supreme Court showdown becomes nearly certain. The bipartisan "Prediction Markets Are Gambling Act" would ban CFTC entities from listing sports contracts. Senators Schiff and Curtis said on CNBC they believe it can pass.

Legal Explainer: The Core Issues

What is Federal Preemption?

Federal preemption is the constitutional principle that when federal and state laws conflict, federal law wins. Kalshi argues the CEA gives the CFTC exclusive jurisdiction over designated contract markets. The 3rd Circuit agreed on April 7. States counter that Congress never intended to strip them of their authority to regulate gambling.

What is the Commodity Exchange Act?

The CEA is the federal law governing futures and derivatives markets. It was updated in the 2010 Dodd-Frank Act, but nobody at the time foresaw prediction market apps. The law prohibits "gaming" as a type of event contract, but doesn't define the term — which is exactly what courts are fighting over.

Are Prediction Markets Gambling?

This is the fundamental question. The 3rd Circuit said no — sports contracts are "swaps" under federal law. Maryland, Massachusetts, Ohio, and Nevada say yes — sports contracts are indistinguishable from sports bets. Arizona's AG filed criminal gambling charges.

What is the Statute of Anne?

An 18th-century British law that allowed losers in illegal gambling to sue winners and recover their losses. A litigation funder is using these laws to file claims against Kalshi in six states.

Could This Go to the Supreme Court?

Almost certainly — and sooner than expected. The 3rd Circuit ruled for Kalshi on April 7. If the 9th Circuit rules for states on April 16, the circuit split would be immediate. A cert petition could follow within months. The 4th Circuit Maryland case in May adds another data point. The CFTC's decision to sue states directly may also accelerate the path to SCOTUS.

Timeline of Key Events

• Jan 2022 — CFTC orders Polymarket to cease and desist, $1.4M fine. Polymarket blocks U.S. users.
• Sep 2023 — CFTC rejects Kalshi's congressional control contracts. Kalshi sues the CFTC.
• Sep 2024 — D.C. District Court rules for Kalshi: election contracts ≠ "gaming."
• Oct 2024 — D.C. Circuit denies CFTC stay. Kalshi launches election markets for the 2024 cycle.
• Nov 2024 — FBI raids Polymarket CEO's home. Trump wins election; Polymarket markets proved accurate.
• Jan 2025 — Kalshi begins offering sports event contracts.
• Mar 2025 — Nevada issues its first state C&D against Kalshi. Kalshi sues NV, NJ, MD.
• Apr 2025 — Kalshi wins preliminary injunctions in Nevada and New Jersey.
• May 2025 — CFTC drops appeal of D.C. election ruling under new administration. Arizona sends C&D to Kalshi.
• Jul 2025 — DOJ/CFTC close investigations into Polymarket. Polymarket acquires QCEX for $112M.
• Aug 2025 — Maryland denies Kalshi's PI. California tribes and Ho-Chunk Nation sue Kalshi.
• Sep 2025 — Massachusetts AG sues Kalshi. 3rd Circuit hears NJ appeal.
• Oct 2025 — NV judge denies Crypto.com PI. Kalshi sues New York. First Statute of Anne suits filed. FanDuel surrenders NV license.
• Nov 2025 — NV judge dissolves Kalshi's injunction. California judge denies tribes' PI. First class actions filed against Kalshi in NY. Polymarket receives CFTC approval.
• Dec 2025 — Polymarket relaunches in U.S. Kalshi sues Connecticut. Coinbase sues CT, MI, IL.
• Jan 2026 — MA court grants PI against Kalshi. NV court grants TRO against Polymarket. CFTC Chair Selig signals agency will defend federal jurisdiction.
• Feb 2026 — CFTC files first-ever amicus brief (Feb 18). 9th Circuit denies Kalshi's stay; Nevada sues Kalshi same day. MA Appeals Court grants Kalshi stay (Feb 18). Tennessee grants Kalshi PI (Feb 19). Kalshi sues Utah (Feb 23). Kalshi discloses insider trading actions; CFTC issues advisory (Feb 25).
• Mar 2026 — Nevada remands cases to state court (Mar 2). Ohio denies Kalshi's PI. Bipartisan House bill introduced (Mar 6). Kalshi sues Iowa (Mar 11) and Arizona (Mar 13). Arizona AG files criminal charges (Mar 17). 9th Circuit denies stay (Mar 19). Nevada issues TRO (Mar 21). "Prediction Markets Are Gambling Act" introduced in Senate (Mar 23). Kalshi and Polymarket announce insider trading guardrails (Mar 23). WA AG sues Kalshi (Mar 28).
• Apr 2026 — CFTC and DOJ sue Arizona, Connecticut, and Illinois (Apr 2). Nevada Judge Woodbury grants PI against Kalshi, extends TRO through Apr 17 (Apr 4). Federal judge in Arizona hears Kalshi's dismissal arguments (Apr 4). 3rd Circuit rules 2-1 for Kalshi — first federal appeals court ruling on prediction markets (Apr 7). Robinhood sues Washington state. 9th Circuit oral arguments scheduled Apr 16 for Kalshi, Robinhood, and Crypto.com v. Nevada.

Prediction Market Lawsuit FAQ

How many lawsuits are there against Kalshi?

As of early April 2026, Kalshi is involved in lawsuits in at least 14 states (adding Washington). These include suits where Kalshi sued regulators, suits where states and tribes sued Kalshi, criminal charges in Arizona, consumer class actions, and Statute of Anne recovery claims. The CFTC has also sued three states on behalf of prediction markets.

How many lawsuits are there against Polymarket?

Polymarket faces at least five active legal matters: the Nevada enforcement action (remanded to state court), its preemptive suit against Massachusetts, and three consumer class actions in New York.

Is Kalshi legal in my state?

The 3rd Circuit ruled on April 7 that the CFTC has exclusive jurisdiction — a major win for Kalshi. But the ruling only directly applies in the 3rd Circuit (NJ, PA, DE). Courts in Maryland, Nevada, Massachusetts, and Ohio have disagreed. Arizona has criminal charges pending. The CFTC sued three states on April 2 to block enforcement. Washington's AG sued Kalshi on March 28. The legal status varies by state and is evolving rapidly.

Is Polymarket legal in my state?

Polymarket is CFTC-regulated and operates in most states. It has been blocked in Nevada since January 2026 and faces potential enforcement in Massachusetts.

What is the biggest prediction market lawsuit?

The 3rd Circuit's April 7 ruling was the first federal appeals court decision — a landmark. But the 9th Circuit oral arguments on April 16 may be even more consequential. If the 9th Circuit sides with states (contradicting the 3rd Circuit), the circuit split would almost certainly trigger Supreme Court review. The 4th Circuit Maryland case in May adds another data point.

When could the Supreme Court hear a prediction market case?

Sooner than expected. The 3rd Circuit ruled for Kalshi on April 7. If the 9th Circuit rules for states on April 16, the circuit split would be immediate — a cert petition could follow within months. Even without a split, the CFTC's decision to sue states directly may accelerate the path to SCOTUS.