Polling data released on June 24 by the Coalition for Prediction Markets found that 48% of Republican voters and 45% of Democratic voters prefer federal oversight through the Commodity Futures Trading Commission. State-level regulation trailed significantly, drawing support from just 27% of Republicans and 35% of Democrats. Only 8% of respondents wanted prediction markets banned outright.

The federal vs. state showdown

The surveys, conducted by Tony Fabrizio and Global Strategy Group, land right in the middle of an escalating jurisdictional fight. The CFTC has been locked in a tug-of-war with more than 40 states and tribal governments over who gets to regulate event contracts. Many of those states classify prediction markets as gambling, which puts them squarely under state authority. The CFTC disagrees, arguing that its exclusive jurisdiction under the Commodity Exchange Act covers swaps and event contracts traded on registered designated contract markets.

The result has been a patchwork of litigation across multiple federal districts, with preliminary rulings going in both directions.

On June 10, the CFTC took its most concrete step yet toward resolving the dispute. Chair Michael Selig oversaw the release of a Notice of Proposed Rulemaking that outlines a three-part analysis for evaluating event contracts. The framework focuses on contracts involving sensitive activities like terrorism or unlawful conduct, while signaling that sports-related contracts would generally be permitted. The NPRM essentially draws a line: contracts traded on CFTC-registered exchanges should fall under federal purview.

This matters because sports betting has become the dominant category in prediction markets. Kalshi, one of the largest regulated platforms in the space, reported approximately $39.7 billion in trading volume, with 87% of that activity concentrated in sports markets. Broader CFTC-regulated prediction market volumes exceeded $25 billion in 2025 alone.

Who’s lobbying for what

The Coalition for Prediction Markets, formed in late 2025, has been the industry’s primary vehicle for pushing federal regulation. Its membership reads like a who’s who of fintech and crypto: Kalshi, Robinhood, Coinbase, and Crypto.com all have seats at the table.

Their argument is straightforward. A fragmented state-by-state regulatory approach creates compliance nightmares for platforms operating nationally, raises costs for consumers, and risks pushing trading activity offshore to unregulated venues.

The coalition’s position aligns neatly with the polling data, which is, of course, not a coincidence. The surveys were commissioned to bolster the case for federal preemption at a moment when the CFTC is actively seeking public comment on its proposed rulemaking.

The states pushing back aren’t doing so without reason. Gambling regulation has historically been a state-level function, and prediction markets that let users bet on the outcome of a football game look a lot like sports betting. States have built entire regulatory and tax infrastructures around gaming. Ceding that authority to a federal commodities regulator would mean giving up both control and revenue.

What this means for investors

For traders and investors in the prediction market ecosystem, the direction of this regulatory battle has significant financial implications. A unified federal framework under the CFTC would dramatically reduce the compliance burden for platforms. It would also provide legal certainty that currently doesn’t exist, which is arguably the single biggest factor holding institutional capital back from the space.

There’s a crypto-specific angle here too. Decentralized prediction markets like Polymarket have operated largely outside the US regulatory perimeter, often by restricting access for American users. For platforms like Coinbase and Crypto.com that are already coalition members, the bet is clearly on the compliance side.

The risk worth watching is the litigation timeline. Courts in multiple districts are weighing the CFTC’s preemption claims, and an unfavorable ruling in any of those cases could stall or reshape the federal push. The NPRM is just a proposal, not a final rule, and the comment period will attract aggressive opposition from state regulators and gaming industry incumbents.