The CFTC vs states battle, key player positions, Clarity Act odds, and what it means for your money. Updated April 22, 2026.
The End Prediction Market Corruption Act, introduced by Sens. Jeff Merkley (D-OR) and Amy Klobuchar (D-MN), would prohibit the president, vice president, and members of Congress from trading event contracts. Co-sponsors include Sens. Van Hollen, Schiff, and Gillibrand. Violations carry $10,000+ fines and profit disgorgement.
3
Senate co-sponsors
$10K+
Min. fine per violation
2
Related bills (+ Murphy, Torres)
PredictionMarkets.us take: This targets government insiders, not retail traders. If anything, clear insider trading rules could strengthen institutional trust in prediction markets. The bill is separate from Murphy's war/mortality ban and the Clarity Act — three different bills pulling in three different directions. See our insider trading explainer for context.
NPR, CNN, and Bloomberg spotlight a growing ethical divergence: Kalshi issued refunds on its Khamenei leadership market and blocks war-outcome contracts. Polymarket allowed six-figure war payouts and only removed a nuclear detonation market after public outcry. Lawmakers cite the split as evidence the industry needs clearer rules.
PredictionMarkets.us take: This is the first major visible policy divergence between the two largest platforms. How each handles conflict and mortality markets will shape the regulatory conversation. See our Kalshi vs Polymarket comparison for the full trust breakdown.
The Bloomberg Editorial Board published a formal piece endorsing regulatory intervention against prediction markets — the first board-level establishment media endorsement of the anti-PM framing. This escalates the narrative war beyond politicians into mainstream financial media.
PredictionMarkets.us take: Bloomberg's editorial conflates sports betting with prediction markets. The data tells a different story: 71% of combined Kalshi + Polymarket volume is in non-sports categories (politics, economics, world events). See our volume breakdown for the full fact check.
Market Signal
If the Clarity Act passes, CFTC authority over prediction markets would be codified into law, preempting state gambling lawsuits. This would resolve 19 pending state lawsuits in the industry's favor.
Federal legislation, court cases, and state-by-state status — with inline market odds where available.
CFTC Chair
“We will see you in court. The CFTC has exclusive jurisdiction over event contracts.”
The Third Circuit ruled on April 6, 2026 in favor of CFTC exclusive jurisdiction over DCM trades. The CFTC also filed an amicus brief in the 9th Circuit and sued Arizona, Connecticut, and Illinois on April 2, 2026 to defend its preemption position.
Senator (D-MA)
“These platforms strip states of their authority to regulate gambling disguised as financial products.”
Called for states to retain power to block prediction markets
Former NJ Governor
“This is about the rights of states to regulate within their borders.”
Advocates state-level regulation over federal preemption
Coinbase CEO
“The CFTC has exclusive jurisdiction. Prediction markets are regulated financial products, not gambling.”
Coinbase invested in Polymarket; supports federal regulatory framework
Utah Governor (R)
“Betting on LeBron James rebounds is not a financial product. It is gambling.”
Led coalition of governors opposing CFTC preemption of state gambling laws
Senator (D-CT)
“Americans should not be able to profit from betting on war, death, and human suffering.”
Drafting bill to ban war/mortality event contracts on CFTC-regulated exchanges
Kalshi CEO
“Prediction markets are the most transparent information tools ever built.”
Leading legal defense against 20+ federal and state actions pending as of April 2026. Mixed outcomes: NJ 3rd Circuit ruled for Kalshi (Apr 6); CFTC won Federal TRO in AZ (Apr 10, PR 9211-26); OH OCCC $5M fine notice (Apr 14); KY HB 904 enacted via veto override (Apr 14); WA AG civil suit pending (Mar 27). state lawsuits challenging Kalshi markets
Media / Editorial
“Prediction markets are chaotic gambling that needs reining in by regulators.”
First board-level establishment media endorsement of anti-PM regulatory framing
CFTC Division of Market Oversight issues Staff Advisory (Release 9193-26) reminding DCMs of Core Principle 3 obligations, alongside an Advance Notice of Proposed Rulemaking (Release 9194-26) opening a 45-day public comment period on new event-contract rules. Chairman Michael S. Selig (Mike Selig) previewed the rulemaking at the FIA Global Cleared Markets Conference in Boca Raton on March 10; official ANPRM issued March 12 (published in Federal Register March 16, Doc. No. 2026-05105).
Sen. Adam Schiff (D-CA) and Rep. Mike Levin (CA-49) formally introduce the DEATH BETS Act, which would amend the Commodity Exchange Act to prohibit CFTC-registered entities from listing contracts tied to terrorism, assassination, war, or individual death.
CFTC Chair Michael S. Selig (Mike Selig) outlines formal rulemaking agenda for prediction markets, including DeFi and event contract regulations. Signals CFTC won't defer to courts.
Underdog acquires CFTC-regulated Aristotle Exchange DCM and DCO entities (separate from PredictIt), gaining its own exchange infrastructure to list and clear event contracts.
Traders file class action lawsuit against Kalshi over the Khamenei death carve-out settlement, challenging the last-traded-price resolution mechanism. $54M+ in market volume.
Kalshi closes a funding round of over $1 billion at a $22 billion valuation, led by Coatue Management — doubling its December 2025 valuation of $11B. Sources: Bloomberg, WSJ (April 19, 2026).
Arizona AG Kris Mayes files 20 misdemeanor criminal charges in Maricopa County Superior Court — 16 unlicensed wagering + 4 election wagering counts. Federal TRO denied by U.S. District Judge Michael Liburdi. First criminal prosecution of any prediction market in the U.S.
Reports emerge that both Kalshi and Polymarket are seeking fundraising rounds at approximately $20 billion valuations, signaling institutional confidence despite ongoing regulatory headwinds. (Kalshi closed a $1B+ round at $22B valuation on April 19, 2026, led by Coatue Management — Bloomberg.)
NPR, CNN, and Bloomberg spotlight a growing ethical divergence: Kalshi issued refunds on its Khamenei leadership market while Polymarket allowed six-figure war payouts. Lawmakers cite the split as evidence the industry needs clearer rules on conflict and mortality markets.
Senators Jeff Merkley (D-OR) and Amy Klobuchar (D-MN) introduce the End Prediction Market Corruption Act, banning the president, vice president, and members of Congress from trading event contracts. Co-sponsors include Sens. Van Hollen, Schiff, and Gillibrand. Fines start at $10,000 per violation.
| Bill | Sponsor | Status | Risk | Impact |
|---|---|---|---|---|
| End Prediction Market Corruption Act | Sens. Merkley (D-OR) & Klobuchar (D-MN) | Introduced | High | Officials trading ban |
| DEATH BETS Act (Schiff-Levin) | Sen. Adam Schiff (D-CA) & Rep. Mike Levin (CA-49) | Introduced | High | War/mortality markets |
| The Clarity Act | Bipartisan coalition | Active | Positive | Federal preemption |
| Platform | Regulator | Status | Risk | Note |
|---|---|---|---|---|
| Kalshi | CFTC-regulated DCM + DCO (Designated Contract Market and Derivatives Clearing Organization) | Live | Medium | 20+ federal and state actions pending as of April 2026. Mixed outcomes: NJ 3rd Circuit ruled for Kalshi (Apr 6); CFTC won Federal TRO in AZ (Apr 10, PR 9211-26); OH OCCC $5M fine notice (Apr 14); KY HB 904 enacted via veto override (Apr 14); WA AG civil suit pending (Mar 27). state lawsuits pending (NV, NJ, MD, MA, MI, OH, CT, TN, NY, UT, AZ, IA, IL, WA + tribal) |
| Polymarket | CFTC DCM via QCX LLC | Live | Medium | QCX LLC d/b/a Polymarket US |
| Interactive Brokers | ForecastEx (CFTC DCM + DCO) | Live | Low | Institutional-grade compliance |
| PredictIt | CFTC No-Action Letter (CFTC Letter 25-20, July 2025 — amended framework via Prediction Market Research Consortium, governed by academic board) | Live | Low | Won case vs CFTC July 2025; continues under no-action letter (Aristotle Exchange DCM/DCO sold to Underdog Mar 9, 2026) |
| FanDuel Predicts | CME Group / CFTC | Live | Low | 18 states, Flutter Entertainment-backed |
| DraftKings Predict | CFTC Introducing Broker + NFA member; launched on CME Group exchange. Gus III LLC (d/b/a DraftKings Predictions) FCM application pending as of Feb 27, 2026. | Live | Low | Super App integration 2026 |
| Robinhood Predict | Via Kalshi (CFTC DCM) | Live | Low | White-label Kalshi markets |
| Crypto.com CDNA | CFTC DCM | Live | Low | Powers Fanatics Markets, Underdog, OG Predictions, Hollywood.com, MyPrize, TruthPredict |
| Sporttrade | State gaming licenses | Live | Medium | State-by-state licensing model |
See full state-by-state availability on the Legal Status page →
Five major industry players launched the Coalition for Prediction Markets on December 17, 2025, to promote fair, safe, and open access to regulated prediction markets. The coalition represents a coordinated industry response to state-level challenges and advocates for federal regulatory clarity.
The CFTC and Major League Baseball signed a first-ever Memorandum of Understanding focused on sports integrity for prediction markets (March 19, 2026) — the same day MLB named Polymarket its exclusive prediction market exchange partner. This is the first time the federal derivatives regulator has formally partnered with a professional sports league on integrity oversight.
CFTC Press Release 9199-26The prediction market space is expanding rapidly. Multiple platforms have filed or announced CFTC DCM and DCO applications, seeking to join Kalshi, Polymarket, ForecastEx, and others as regulated exchanges. Here is the current landscape of known pending applicants:
| Platform | Filing / Status | Details |
|---|---|---|
| Sporttrade | DCM + DCO applied | Application posted to CFTC public docket January 27, 2026 (announced February 4, 2026). Currently state-licensed sports exchange in 5 states. Seeking to add federal CFTC layer. |
| ProphetX | DCM + DCO applied | Filed November 10, 2025 for DCM + DCO dual registration. Currently operates as sweepstakes platform. Approval expected in 2026. |
| Novig | DCM applied (Ludlow Exchange LLC) | Ludlow Exchange LLC DCM application pending CFTC (filed January 21, 2026). Novig currently operates as sweepstakes; plans to transition to full CFTC-regulated prediction market. |
| Railbird Exchange (DraftKings) | DCM approved (integration pending) | Railbird Exchange LLC already holds CFTC DCM license (approved June 2025). Acquired by DraftKings October 21, 2025. DCM integration announced March 2, 2026; not yet live. |
| Rothera (Robinhood + SIG) | DCM + DCO registered | Rothera LLC (JV between Robinhood Markets and SIG) holds CFTC DCM and DCO registrations (acquired via MIAXdx). Exchange expected to launch Q2 2026. |
| Gemini Titan LLC | DCM approved Dec 10, 2025 | CFTC designated Gemini Titan LLC as DCM on December 10, 2025 under Acting Chair Caroline Pham. Also received CFTC no-action letter December 11, 2025. |
| Betr Predictions LLC | IB application pending | NFA IB application pending since October 2025. Multi-year partnership with Polymarket announced March 4, 2026. Will embed Polymarket event contracts in Betr super app (1M paying users). |
| Smarkets | Seeking DCM | UK-based exchange exploring CFTC DCM application to enter the U.S. regulated prediction market space. |
| tZERO | Seeking DCM | Digital securities platform exploring CFTC DCM application for prediction markets. |
| PMEX Markets | DCM + DCO applied | Filed DCM application February 9, 2026 and paired DCO application same day. Source: CFTC docket. |
| DimeTrades (PredictCraft Mkt Inc.) | DCM applied | Filed DCM application February 11, 2026. Source: CFTC docket ID 59756. |
| XV Exchange / STX | DCM + DCO applied | Filed DCM application December 9, 2025; paired DCO (XV Clearing) filed February 27, 2026. Source: CFTC docket ID 58807. |
| Water Street Labs | DCM applied | Filed DCM application January 22, 2026. Source: CFTC docket ID 59469. |
| Juice Exchange | DCM applied | Filed DCM application January 27, 2026. Source: CFTC docket ID 59480. |
| Optex Markets | DCM applied | Filed DCM application January 13, 2026. Source: CFTC docket ID 59349. |
| OneChronos Markets | DCM applied | Filed DCM application July 31, 2025. Source: CFTC docket ID 57746. |
| RSBIX (Matchbook) | DCM applied | Filed DCM application September 16, 2025. UK-based Matchbook betting exchange seeking US regulatory foothold. Source: CFTC docket ID 58152. |
The CFTC ANPRM (March 12, 2026, RIN 3038-AF65) opened a 45-day public comment period due April 30, 2026 — which will shape the rulemaking environment for all pending applications. Source: Federal Register Doc. 2026-05105.
The Commodity Futures Trading Commission (CFTC) is the primary federal regulator for prediction markets. Chair Michael S. Selig (Mike Selig) has taken an aggressively pro-PM stance, filing an amicus brief asserting exclusive federal jurisdiction — directly challenging 20+ federal and state actions pending as of April 2026. Mixed outcomes: NJ 3rd Circuit ruled for Kalshi (Apr 6); CFTC won Federal TRO in AZ (Apr 10, PR 9211-26); OH OCCC $5M fine notice (Apr 14); KY HB 904 enacted via veto override (Apr 14); WA AG civil suit pending (Mar 27). state lawsuits, with 38 states filing amicus briefs supporting state authority.
What to watch: Clarity Act vote timeline, 9th Circuit emergency appeal ruling on Nevada case, CFTC Commissioner confirmation hearings, and any formal rulemaking on war/terrorism contract categories. Also watch: pending DCM applications for Sporttrade, ProphetX, Novig, Railbird (DraftKings), and Rothera (Robinhood) — each approval adds a new regulated exchange and expands the legal market.
CFTC-regulated exchanges must hold customer funds in segregated accounts. Your deposits are separate from company operating capital.
If the DEATH BETS Act passes, war/mortality markets would be delisted. Your existing positions would be settled at current prices. Non-war markets (politics, economics, sports) would be unaffected.
