U.S. prediction markets gain support for federal rules amid state licensing fight

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Highlights

A Fabrizio Lee & Associates poll shows 48% of Republicans favor federal prediction market regulation, compared to 27% preferring state oversight, with similar Democratic trends.
Kalshi sued Illinois state officials on June 18 over a new law mandating state licensing, claiming it conflicts with federal regulation amid rising CFTC-state legal disputes.
On June 18, the CFTC sued Kentucky after the state accused Kalshi and Polymarket of illegal sports betting, intensifying the federal versus state regulatory battle over prediction markets.

Poll results and regulatory backdrop

As reported by The Block, two polls commissioned by the Coalition for Prediction Markets indicate that Republican and Democratic voters both prefer federal regulation to a state-by-state framework for prediction markets.

According to a memo the coalition shared on Wednesday, a survey of Republican voters by Fabrizio Lee & Associates found that 48% support a uniform federal framework, compared with 27% who prefer individual states to regulate prediction markets independently. A separate poll by Democratic firm Global Strategy Group found that 45% of Democrats favor federal rules, versus 35% who back state oversight.

The memo also says only 8% of voters believe prediction market platforms should be illegal. It adds that majorities of voters in both parties support letting consumers decide whether to participate, while younger voters appear more open to the products, with more than half of respondents under 35 saying they are interested in or have already used prediction markets.

State disputes intensify around sports contracts

The survey results emerge while the CFTC and prediction market operators are in an ongoing battle with states over authority for event contracts, particularly those linked to sports. The dispute centers on whether those contracts fall under federal derivatives oversight or violate state gambling laws.

On Tuesday, Kalshi sued Illinois Governor JB Pritzker and other state officials over a new law requiring prediction market operators to obtain a state license, arguing that the measure conflicts with federal law. Earlier the same day, the CFTC sued Kentucky after state regulators accused Kalshi, Polymarket and others of running illegal sports betting platforms.

CFTC Chair Michael Selig argues that the agency has exclusive jurisdiction over prediction markets, while states maintain that sports-event contracts breach local gambling restrictions. Sports law attorney Daniel Wallach criticizes the polls' framing, saying they leave out sports betting, which he describes as the central issue in the conflict.

Our earlier report on CME Group’s lawsuit against the CFTC over bitcoin-linked perpetual futures outlined how the case turns on whether the contracts should be classified as swaps rather than futures. We noted that the outcome could influence how quickly new derivatives reach the U.S. market and sharpen debates over regulatory pathways and supervisory authority as innovative products test existing frameworks.

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