Finance News

Story: Prediction Markets Face Federal-State Legal War Over Jurisdiction

By Sydney TheCMO

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Court Battles Heat Up. The Third Circuit's preliminary ruling favors Kalshi by putting their contracts under derivatives…

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Polymarket's Big Infrastructure Move. Polymarket is making major changes to prepare for a regulated U.S. comeback.

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Kalshi won big this week. A federal appeals court ruled their sports contracts count as derivatives, not gambling, giving the platform major legal cover against state crackdowns.

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The Commodity Futures Trading Commission isn't stopping there. They're suing Arizona, Connecticut, and Illinois to block state enforcement actions against prediction markets.

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The Third Circuit's preliminary ruling favors Kalshi by putting their contracts under derivatives law, which limits what states can do about them.

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Connecticut and other states argue these platforms are running unlicensed gambling operations. The CFTC says they're federally regulated derivatives.

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Meanwhile, Kalshi CEO Tarek Mansour appeared on The Axios Show April 7, talking about insider trading responsibilities. He said exchanges need to identify and stop bad actors.

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Polymarket is making major changes to prepare for a regulated U.S. comeback. The platform is switching to its own token called Polymarket USD, backed one-to-one by USDC.

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The upgrade includes a new trading engine and multi-signature wallet support. Polymarket wants to reduce technical risks while making it easier for big players to jump in.

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Binance Wallet just added prediction market access too. The integration lets regular users bet on real-world events without needing specialized knowledge.

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Trading volumes are surging despite the legal mess. Kalshi already has $30 million wagered on whether tech layoffs in 2026 will beat last year's numbers.

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Mansour thinks retail traders are crucial for keeping predictions accurate. He's been vocal about needing a broad user base beyond traditional finance pros.

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States like Connecticut aren't buying the federal argument. They see unlicensed gambling operations that need to be shut down.

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The CFTC's position is pretty clear: these are federally regulated derivatives, period. By asserting federal jurisdiction, they want to create uniform rules instead of letting…

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Platforms find themselves caught in the middle. They support federal enforcement against bad actors but face potential restrictions from new federal trading rules.

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