On March 11, Kalshi filed a lawsuit in the U.S. District Court for the Southern District of Iowa against Attorney General (AG) Brenna Bird and members of the Iowa Racing and Gaming Commission. Kalshi’s complaint asks the court to declare that the Commodity Exchange Act (CEA) and the Commodity Futures Trading Commission’s (CFTC) “exclusive jurisdiction” over trading on designated contract markets preempt Iowa’s gambling and election‑wagering provisions as applied to Kalshi’s event contracts.
Arizona Attorney General Kris Mayes has filed against Kalshi what appears to be the first criminal case in the U.S. against a federally regulated prediction market platform. The state alleges Kalshi is operating an illegal gambling enterprise and facilitating unlawful election wagering by Arizona residents.
On March 12, 2026, the Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight issued Staff Advisory Letter No. 26-08 to all designated contract markets (DCMs), signaling a supportive stance toward prediction markets and other event-based derivatives, including contracts based on the outcome of sporting events. While reiterating existing compliance obligations, the advisory emphasizes the agency’s interest in fostering innovation and growth in these markets within the framework of the Commodity Exchange Act. At the same time, the CFTC released an advance notice of proposed rulemaking seeking broad public comment on whether and how to further regulate event contracts.
A recent decision from the U.S. District Court for the Middle District of Tennessee marks a significant development in the ongoing dispute over whether sports event contracts offered on prediction market platforms are properly regulated by the Commodity Futures Trading Commission (CFTC) or whether such contracts should be regulated by the states as sports betting. Tennessee officials had issued a cease‑and‑desist order contending that certain sports‑linked event contracts were akin to unlicensed sports wagering under state law. Prediction contract platform provider, Kalshi, responded by filing suit in federal court, arguing that these contracts were “swaps” governed exclusively by the Commodity Exchange Act and subject to the CFTC’s jurisdiction, not Tennessee’s sports‑betting framework.
In this special crossover episode of Regulatory Oversight and FCRA Focus, Kim Phan is joined by Michael Yaghi, partner in Troutman Pepper Locke’s Regulatory Investigations, Strategy + Enforcement practice group, to unpack the California Department of Financial Protection and Innovation’s (DFPI) latest effort to require registration for the credit reporting industry. They discuss DFPI’s second request for comment, how it fits into California’s broader push to regulate nonbank financial services, and which entities may be swept in beyond the “big three” consumer reporting agencies — such as furnishers, data brokers, specialty credit reporting agencies, resellers, and fintechs. Kim and Michael also explore how narrowly (or broadly) the rules might be drawn, potential overlap and tension with existing FCRA requirements, what registration and reporting could mean in practice for covered entities, and what companies should be doing now as the February 26 comment deadline approaches.
In this crossover episode, Regulatory Oversight host Stephen Piepgrass teams up with Payments Pros host Keith Barnett to unpack how prediction markets, gaming, and payments intersect in a rapidly evolving and legally uncertain landscape. Drawing on Keith’s extensive regulatory experience, they explain what prediction markets are, why these contracts are treated as swaps rather than securities, and how that distinction affects insider trading issues. Stephen and Keith then address the growing tension between federal regulators and state attorneys general over whether these products are trading or unlicensed sports betting, the CFTC chair’s recent criticism of “regulation by enforcement,” and the NCAA’s push to pause college sports contracts. They close by examining what this means for banks, payment processors, and other service providers navigating know-your-customer and “lawful transaction” obligations while the law remains in flux.
Stephen Piepgrass, a partner in Troutman Pepper Locke’s Regulatory Investigations, Strategy, and Enforcement Practice Group, was quoted in the January 30, 2026 Corporate Compliance Insights article, “CFTC Withdraws Proposed Rule on Prediction Markets.”
“Taken together, these statements leave observers unclear about what position the CFTC may ultimately take on insider trading-type behaviors,” Stephen
Troutman Pepper Locke’s Securities Investigations and Enforcement team counsels and defends clients through all stages of securities enforcement proceedings. Our attorneys have served in key government agencies and regulatory bodies, and bring their insight to bear in each representation. The team includes a former branch chief of the Division of Enforcement at the SEC, former enforcement lawyers, regulators and government attorneys, assistant United States Attorneys and former assistant attorneys general, as well as in-house counsel for public companies. Our lawyers and practice have been identified as leaders in the field by publications such as the Legal 500, SuperLawyers, Benchmark Litigation, and Chambers USA.
In this episode of Regulatory Oversight, host Stephen Piepgrass, who leads Troutman Pepper Locke’s Regulatory Investigation Strategy and Enforcement (RISE) practice, is joined by partner Lu Reyes for a deep dive into the national security and enforcement implications of predictive markets. The discussion centers on a headline‑grabbing Polymarket trade that appeared to anticipate former Venezuelan President Nicolás Maduro’s capture and yielded roughly $400,000 in profit, raising questions about insider trading and classified information leaks.
Popular prediction markets platforms recently announced that they have formed the Coalition for Prediction Markets. According to the coalition’s website, it aims to unite exchanges, brokers, and advocates to expand consumer access to safe, transparent, and integrity-driven prediction markets in the U.S. The coalition contends that prediction markets currently operate under a federal framework, but that framework is being threatened by state regulators “seeking to block consumer access and extend their own authority.” This messaging signals that prediction market operators are prepared to vigorously oppose state regulation in an effort to preserve exclusive federal oversight.