TLDR
- 17 Democratic senators want Congress to stop CFTC from using federal funds to sue states over prediction market regulation
- The group is led by Senators Richard Blumenthal and Jeff Merkley
- CFTC has already filed suits against nine states, including Connecticut, Illinois, New York, and Kentucky
- Senators argue prediction markets are gambling products, not financial hedging tools
- The senators are pushing for a funding block in the Fiscal Year 2027 appropriations bill
Senators Push to Cut CFTC Funding for State Prediction Market Lawsuits
A group of 17 Democratic senators is pushing Congress to stop the Commodity Futures Trading Commission from using federal money to sue states over how they regulate online prediction markets.
The effort is led by Senator Richard Blumenthal of Connecticut and Senator Jeff Merkley of Oregon. They sent a letter to the Senate Appropriations Subcommittee on Financial Services and General Government outlining their concerns.
The senators argue the CFTC is overstepping its authority and putting pressure on states that are trying to manage gambling risks within their own borders.
CFTC Has Already Sued Nine States
The CFTC has filed lawsuits against nine states so far: Connecticut, Illinois, Arizona, Wisconsin, New York, Minnesota, Rhode Island, New Mexico, and most recently Kentucky.
The agency claims it has exclusive jurisdiction over prediction markets. The lawsuits are aimed at blocking state efforts to regulate or restrict operators in this space.
Blumenthal has publicly accused the CFTC of acting as “nothing more than a tool” for prediction market operators like Kalshi and Polymarket. He says the agency is putting market interests ahead of consumer protection.
Several states and tribal governments have already moved to regulate or ban prediction market platforms. Some have required permits and imposed special taxes. Others have tried to shut operators out entirely.
The senators say those efforts are being blocked by the CFTC’s legal campaign. They argue the agency is helping operators get around state consumer protections.
In their letter, the senators wrote that the CFTC risks “becoming an instrument and enabler of online prediction markets’ efforts to bypass states’ consumer protections and oversight, creating a race-to-the-bottom in gambling.”
What the Senators Are Asking For
The senators are calling for specific language to be added to the Fiscal Year 2027 federal funding bill. That language would bar the CFTC from spending any federal dollars to challenge state gambling laws or compacts.
The core of their argument is that prediction markets have changed. They were originally designed as financial tools to hedge risks in agriculture and economic sectors.
Now, they cover sports, politics, and foreign affairs. Senators say that makes them gambling products, not financial instruments.
They believe states and tribal governments have the authority to regulate gambling, and the CFTC should not be able to override that with federal lawsuits.
The letter was backed by 15 additional senators, bringing the total to 17. It is now up to the appropriations subcommittee to decide whether to include the funding restriction in the FY2027 bill.
