CFTC Accelerates Prediction Market Fight With New State Lawsuits

Federal regulators escalated the legal fight over who should control the rapidly growing prediction market industry by suing states cracking down on the platforms, signaling a new front that could push the dispute toward the Supreme Court or prompt Congress to act.

The lawsuits—filed in federal court Thursday by the Commodity Futures Trading Commission and the Justice Department against Illinois, Connecticut, and Arizona—say states are encroaching on the agency’s turf in trying to regulate prediction markets.

The CFTC’s unprecedented move surprised lawyers given that the legal issues are already being litigated in cases between the states and prediction market ...