"Prediction markets are platforms where people trade contracts based on the outcomes of future events. Recently, they have been in the news due to a major legal battle in the US over regulatory authority. Central to the dispute is Polymarket's federal lawsuit against Massachusetts. The outcome of this case could determine whether these markets are regulated exclusively at the federal level or whether states can also enforce their own rules."
"A federal lawsuit with broad implications In February 2026, Polymarket filed suit in the US District Court for the District of Massachusetts to preempt enforcement by state regulators that would require it to comply with Massachusetts gambling laws. The company contends that Congress has granted exclusive authority over "event contracts," the core products of prediction markets, to the CFTC. According to Polymarket, this renders state efforts to stop or limit its operations unlawful."
Prediction markets allow trading of contracts tied to future event outcomes. Polymarket sued Massachusetts in February 2026 seeking to preempt state enforcement that would subject its platform to state gambling laws. Polymarket argues that Congress granted the Commodity Futures Trading Commission (CFTC) exclusive authority over event contracts, classifying them as derivatives under the Commodity Exchange Act. States such as Massachusetts and Nevada have pursued restrictions, especially on sports-related event contracts, after actions against platforms like Kalshi. A court ruling for Polymarket could affirm federal preemption, centralize oversight under the CFTC, maintain national market access, and prevent inconsistent state regulation.
Read at Cointelegraph
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