The Commodity Futures Trading Commission (CFTC) on April 24 submitted an amicus brief to the Massachusetts Supreme Judicial Court, asserting exclusive authority over U.S. commodity derivatives markets, including event contracts known as prediction markets. The filing in Commonwealth v. KalshiEx LLC (No. SJC-13906) escalates the federal-state tug-of-war over who gets to regulate these rapidly growing platforms.
CFTC: Exclusive Authority Rooted in Law
The brief traces the history of the Commodity Exchange Act, explaining that Congress created the CFTC in 1974 to replace fragmented state oversight with a uniform national system for futures trading. Lawmakers granted the agency exclusive jurisdiction over all futures, options, and swaps traded on registered exchanges—including event contracts tied to sports, elections, or weather. Applying state gambling laws to CFTC-regulated markets, the commission argued, would directly conflict with federal law and fragment the market.
Federal Lawsuits and Court Orders Mount
The CFTC has filed lawsuits against multiple states, including New York, and coordinated with the Department of Justice (DOJ) to fight state enforcement actions. In Arizona, a court granted a temporary restraining order blocking a criminal case against a prediction market platform. CFTC Chairman Michael S. Selig took to social media platform X, naming Massachusetts directly: “Despite several court decisions blocking states from pursuing unlawful enforcement actions against CFTC-regulated exchanges, some states are still encroaching on our exclusive authority. Massachusetts, we’ll see you in court.”
Selig further stated: “Congress entrusted the CFTC with sole authority to regulate commodity derivatives markets, including prediction markets. To any state that seeks to nullify federal law and seize authority over these markets, I say again: we will see you in court.” The comments come in response to Massachusetts Attorney General’s lawsuit against KalshiEx, which alleges the platform violates state gambling laws.
Industry reaction is mixed. Supporters of federal preemption argue that state-by-state enforcement would stifle innovation, while state officials maintain that prediction markets are essentially gambling and subject to local prohibitions. As the CFTC expands its legal offensive, the final boundaries of federal authority over prediction markets remain unsettled, pending higher court rulings.