Blumenthal and Merkley Push Congress to Block CFTC Federal Funds for Prediction Market Lawsuits

A group of Democratic US senators led by Richard Blumenthal of Connecticut and Jeff Merkley of Oregon is pressing Congress to stop the Commodity Futures Trading Commission (CFTC) from using federal funds to sue states over their regulation of online prediction markets.

The senators’ push follows CFTC lawsuits against nine states, including Connecticut, Illinois, Arizona, Wisconsin, New York, Minnesota, Rhode Island, New Mexico, and Kentucky, and they argue the agency is interfering with states’ and Tribes’ authority to regulate or restrict gambling.

@coindesk

In their letter to the Senate Appropriations Subcommittee on Financial Services and General Government, the senators warned that “recent lawsuits filed by the CFTC against states regulating online prediction markets will only fuel a gambling public health crisis and interfere with states’ and Tribes’ longstanding prerogative to regulate or even restrict gambling.”

The senators also said prediction markets have expanded into sports, politics, and foreign affairs, and they urged appropriators to include language in the Fiscal Year 2027 funding bill that would bar the agency from spending federal dollars to challenge state gambling laws or compacts.

Blumenthal has accused the agency of acting “nothing more than a tool” for operators like Kalshi and Polymarket, saying the commission has put market interests ahead of its duty to protect consumers and public safety.

The senators’ effort is framed as a response to CFTC Chair Michael Selig’s legal fights, with the TradingView report saying Blumenthal, Merkley, and 15 other Democrats urged committee leadership to block the CFTC from using federal funds in Selig’s legal fights against state gaming authorities.

Selig has defended the agency’s position that the CFTC has “exclusive jurisdiction” over prediction markets by claiming that the event contracts on the platforms qualify as “swaps” under its purview, according to TradingView.

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The senators warned that “Through engaging in this campaign of litigation and intimidation, the CFTC risks becoming an instrument and enabler of online prediction markets’ efforts to bypass states’ consumer protections and oversight, creating a race-to-the-bottom in gambling,” and the same language appears in the Merkley (.gov) letter.

TradingView also notes that the ongoing legal battles have led some experts to expect that one of the cases involving the CFTC and state gaming regulators could ultimately reach the US Supreme Court, with the article pointing to the 2018 Murphy v. National Collegiate Athletic Association ruling on sports betting authority.

Cointelegraph adds that Selig, as the sole commissioner and chair of the CFTC, has unilaterally led the agency’s policy agenda under US President Donald Trump, vowing to go after state authorities that crack down on prediction markets.

As the US Senate is expected to soon vote on the Digital Asset Market Clarity (CLARITY) Act, TradingView says the bill would establish separate regulatory roles for the CFTC and Securities and Exchange Commission over digital assets.

TradingView reports that last week gaming organizations petitioned the Senate to add language barring sports event contracts in the CLARITY Act, arguing that the CFTC wasn’t created to regulate such wagers.

In a separate development tied to prediction-market listings, Event Horizon says Polymarket US is self-certifying “Next Team” markets, including markets for high school recruits signing with colleges, and it describes Polymarket as withdrawing the self-certification for NCAA “next team” markets.

Event Horizon also quotes NCAA president Charlie Baker saying, “The NCAA vehemently opposes college sports prediction markets,” and it says the NCAA president linked the issue to “harassment and abuse for lost bets on game performance.”

The same Event Horizon report includes the NFL’s objection that it wanted to protect game participants from “unfair and unwanted allegations” tied to gambling and prediction markets, and it says the NFL objected to four types of offerings including those “knowable in advance such as draft picks, player signings and coach firings.”