CFTC Files Amicus Brief Reaffirming Jurisdiction Over Prediction Markets

On April 24, 2026, the Commodity Futures Trading Commission submitted an amicus brief before the Massachusetts Supreme Judicial Court in Commonwealth of Massachusetts v. KalshiEx LLC, reinforcing its position that event contract markets, commonly referred to as prediction markets, fall within the Commission’s exclusive jurisdiction under the Commodity Exchange Act.

The filing reflects a broader and increasingly coordinated effort by the CFTC to preserve federal oversight of commodity derivatives markets in the face of ongoing state-level enforcement activity. In its brief, the Commission outlines the statutory framework established by Congress, emphasizing that the Commodity Exchange Act provides a comprehensive regulatory scheme governing derivatives trading on CFTC-registered exchanges. According to the CFTC, this framework preempts the application of state laws that would otherwise regulate or restrict trading activity occurring on such platforms.

The Massachusetts matter is part of a series of disputes testing the boundary between federal derivatives regulation and state gambling and consumer protection laws. Several states have advanced the position that certain event-based contracts resemble or function as prohibited wagering activity. The CFTC, by contrast, maintains that where such contracts are listed and traded on a registered designated contract market, they are subject to federal regulation and oversight, not state-by-state enforcement regimes.

The Commission’s recent litigation posture underscores this view. In addition to the Massachusetts filing, the CFTC has initiated actions against Arizona, Connecticut, Illinois, and New York, challenging state efforts to regulate or prohibit prediction market activity conducted on federally regulated exchanges. The agency has also secured interim relief in at least one jurisdiction and has advanced preemption arguments before the U.S. Court of Appeals for the Ninth Circuit.

Chairman Michael S. Selig’s accompanying statement reflects the Commission’s firm stance. He noted that certain states have continued to pursue enforcement actions notwithstanding prior judicial rulings limiting such efforts and reiterated that Congress has vested the CFTC with sole authority over commodity derivatives markets, including event contracts.

The central legal issue in these disputes is whether, and to what extent, the Commodity Exchange Act preempts state law as applied to CFTC-regulated exchanges offering event contracts. The Commission’s position is that federal law occupies the field with respect to derivatives market structure and oversight, leaving limited room for concurrent state regulation where it would conflict with or undermine the federal regime.

For market participants, the outcome of these proceedings will have meaningful implications. A determination that the CFTC’s jurisdiction is exclusive would support a uniform, nationwide regulatory framework for prediction markets operating through registered exchanges. Conversely, if states are permitted to apply their own regulatory or enforcement regimes, exchanges may face a fragmented compliance landscape with potentially conflicting obligations.

Regardless of the outcome, the CFTC’s filing signals a clear intent to assert and defend its authority over this emerging category of derivatives products. As litigation proceeds across multiple jurisdictions, courts will play a central role in clarifying the scope of federal preemption and the regulatory treatment of prediction markets under existing law.