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The federal government is suing Connecticut, Arizona and Illinois, challenging their efforts to regulate prediction market operators such as Kalshi and Polymarket<\/span><\/p>\n<\/div>\n The federal government on Thursday sued Connecticut, Arizona and Illinois, challenging their efforts to regulate prediction market operators<\/a> such as Kalshi and Polymarket.<\/p>\n All three states have sent cease and desist orders to such companies accusing them of engaging in illegal online gambling under state law. Arizona also filed criminal charges last month<\/a> against Kalshi for allegedly violating state gambling laws and a law that makes betting on elections illegal. <\/p>\n The Commodity Futures Trading Commission contends in court filings that it, not the states, regulates these companies.<\/p>\n \u201cThe CFTC will continue to safeguard its exclusive regulatory authority over these markets and defend market participants against overzealous state regulators,\u201d CFTC Chairman Michael S. Selig said in a written statement. He said Congress \u201crejected such a fragmented patchwork of state regulations\u201d because it led to increased risk of fraud and poor consumer protection.<\/p>\n