CFTC Moves to Block Connecticut Prediction Market Crackdown
The Commodity Futures Trading Commission wants a federal judge to stop Connecticut from enforcing its gambling laws against prediction market platforms. It filed a motion for a preliminary injunction on Sept. 11 in the U.S. District Court for the District of Connecticut. The filing followed cease-and-desist orders the state sent to nine prediction market operators, plus nearly 30 subpoenas tied to its investigation.
Robinhood moved to intervene in that lawsuit the same day. The brokerage got one of the cease-and-desist orders, and it told the court the enforcement action gives it a direct stake in the outcome. Connecticut hasn't opposed the intervention.
All of this landed weeks after a federal judge rejected Kalshi's request for a preliminary injunction, and a separate injunction pending appeal, in August. Connecticut then filed its own enforcement suit against Kalshi. Coinbase has sued the state too. That case is stayed for now.
Over at the Supreme Court, Crypto.com has joined Robinhood in pressing for review of a Ninth Circuit decision that lets Nevada enforce its gambling laws against sports event contracts. North American Derivatives Exchange lodged its petition on Sept. 11, a week after Robinhood filed its own request. The Ninth Circuit ruled on Aug. 28 that the Commodity Exchange Act doesn't preempt Nevada's regulation of the contracts. Kalshi is chasing an en banc rehearing on that ruling. New Jersey, separately, has asked the Supreme Court to review the Third Circuit's decision in Kalshi's favor.
In Wisconsin, U.S. District Judge William Conley has cleared Kalshi and Robinhood to seek an immediate appeal in the Ho-Chunk Nation's challenge to sports event contracts offered on tribal lands. Conley certified two questions for interlocutory appeal. The first: whether the Commodity Exchange Act or the Unlawful Internet Gambling Enforcement Act preempts the Nation's authority under the Indian Gaming Regulatory Act to regulate those contracts. He had already found that federal commodities law doesn't override the tribe's regulatory power. The case is stayed while the defendants seek permission from the Seventh Circuit to appeal. Conley pointed to conflicting rulings around the country and wrote that the matter will "certainly be appealed all the way up to the Supreme Court." The Seventh Circuit still has to agree to take the interlocutory appeal.
Kalshi, meanwhile, has told customers how it will handle its player-participation contracts. It pulled injury-related markets earlier this month and briefly restored some last week. In an email to affected users, the exchange said it removed its "Pro Football Week 1: Players to Compete" markets after regulatory discussions. Existing contracts will settle based on the applicable Week 1 results. Winning positions get paid as normal. Anyone whose position settles as a loss gets reimbursed for the cost of that position.
The European Securities and Markets Authority has carved out a section for prediction markets in its latest risk report. ESMA said the products haven't gained much traction in Europe, partly because event contracts may fall under MiFID II, MiCA or national gambling laws. The biggest platforms generally don't hold the EU authorizations needed to market such products. The regulator also questioned how well geographic restrictions work, noting that users can potentially reach platforms through VPNs even in restricted areas. ESMA called the effectiveness of those controls uncertain and said continued monitoring is warranted.
Sunderland has signed a multi-year sleeve sponsorship deal with Shuffle, a Curaçao-licensed crypto casino and sportsbook. It comes as the Premier League's voluntary ban on front-of-shirt gambling sponsorships takes effect. Shuffle replaces LiveScore Bet, which held the sleeve last season. Sunderland joins Aston Villa, Everton, Bournemouth, Brentford, Crystal Palace and Nottingham Forest in carrying a gambling brand elsewhere on the kit.
Monday brings a hearing on the CFTC's request for a preliminary injunction to block New York's enforcement against prediction markets. If the court denies it, the state could keep or expand its efforts, potentially including geofencing requirements. New Jersey lawmakers will also weigh AR 150, a resolution urging limits on targeted gambling ads aimed at people showing signs of problem gambling or addiction. Regulated sportsbooks face forecasts of flat or modest growth after the first full Sunday of the NFL season, with attention turning to whether prediction markets are pulling users away. Connecticut remains the state to watch. A decision on its effort to remand its Kalshi case to state court could come at any time.