Opinion: The recent lawsuit outcome of Polymarket will determine the regulatory jurisdiction of the US prediction market.

Sum upPolymarket recently filed a lawsuit in Massachusetts, claiming that the regulatory authority over prediction markets belongs to the U.S. Commodity Futures Trading Commission (CFTC) rather than the state government. This lawsuit could impact the regulatory framework for prediction markets in the United States, determining whether they can bypass state gambling laws or must adhere to individual state regulations.BlockBeats News, February 19 — Recently, Polymarket filed a federal lawsuit against Massachusetts that could determine whether the regulation of the U.S. prediction markets falls under federal or state jurisdiction. In the lawsuit, Polymarket argues that Congress has granted the Commodity Futures Trading Commission (CFTC) exclusive authority to regulate “event contracts” (such as sports and political prediction markets), and therefore state governments have no right to independently ban or regulate these platforms. The lawsuit aims to prevent potential enforcement actions by Massachusetts Attorney General Andrea Campbell. Previously, the state court issued a preliminary injunction against Polymarket’s competitor Kalshi, ruling that its sports-related contracts constitute unlicensed sports betting. The regulatory conflict between the U.S. federal government and states is intensifying. Prediction market platforms claim that they are derivatives markets regulated by the CFTC and can operate nationwide. However, states like Massachusetts and Nevada view these platforms as “sports betting loopholes” to evade state gambling laws, leading to multiple lawsuits and injunctions. The outcome of Polymarket’s appeal could reshape the regulatory framework for prediction markets in the U.S., determining whether these platforms can operate free from state gambling restrictions, or if they must comply with different state rules, potentially even escalating to the U.S. Supreme Court.

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