Seventeen Democratic senators are urging the Senate Appropriations Subcommittee to include a rider in the FY2027 spending bill that would prohibit the CFTC from using any federal funds to sue states over prediction-market regulation, escalating a multi-front jurisdictional battle spanning nine states and tribal gaming authorities.
Seventeen Democratic senators sent a letter to the Senate Appropriations Subcommittee on Thursday urging lawmakers to cut off CFTC funding for its campaign of lawsuits against states that have tried to regulate prediction-market platforms under local gambling laws.
Sens. Richard Blumenthal and Jeff Merkley led the effort, joined by 15 colleagues in a letter dated June 24 addressed to Subcommittee Chair Bill Hagerty and Ranking Member Jack Reed. The senators proposed an FY2027 appropriations rider that would prohibit the CFTC from using any funds under the bill “for the purposes of intervening, including through litigation, in state and tribal gambling laws and their enforcement with respect to event contracts.”
Ninth State, Same Week
The letter arrived days after the CFTC sued Kentucky on Monday, making it the ninth state to face federal litigation over the prediction-market jurisdiction question. The CFTC’s multi-state campaign began in April with suits against Arizona, Connecticut, and Illinois, followed by Wisconsin in late April and New Mexico earlier this month.
The CFTC’s legal theory across all nine suits holds that event contracts offered by federally registered platforms like Kalshi and Polymarket are swaps under the Commodity Exchange Act, giving the agency exclusive federal jurisdiction and preempting state gaming laws. States have pushed back, arguing their gambling statutes apply to the platforms regardless of federal registration.
Spending Power as Brake
The proposed rider would reach further than any single lawsuit. An appropriations prohibition would constrain all future CFTC enforcement actions under that budget year, not just the existing nine cases. The mechanism is Congress’s power of the purse: rather than legislating who wins the underlying legal dispute, the rider would simply deny the CFTC the funds to pursue it.
The senators are not the only Washington actors trying to shape the fight. Gary Gensler, former chair of both the CFTC and SEC, filed an amicus brief in the Sixth Circuit arguing that sports-event prediction contracts are not swaps under Dodd-Frank, directly contradicting the CFTC’s own litigation posture. A coalition of federally recognized tribes and Indian gaming bodies also filed amicus briefs in two federal cases, arguing CFTC preemption would strip them of authority to regulate prediction-market platforms on Native land.
On the industry lobbying front, the American Gaming Association and two hospitality unions pressed senators to insert a sports-betting carve-out into the CLARITY Act, the crypto market-structure bill moving through Congress. The prediction-market platforms have countered in court: Kalshi separately sued Illinois Gov. J.B. Pritzker over a state law imposing a new regulatory regime on prediction-market operators.
Senate Signatories
The 17 signatories are uniformly Democratic: Blumenthal, Merkley, Catherine Cortez Masto, Tina Smith, Brian Schatz, Jacky Rosen, Adam Schiff, Maria Cantwell, Alex Padilla, Chris Murphy, Elizabeth Warren, Ben Ray Lujan, Martin Heinrich, John Hickenlooper, Sheldon Whitehouse, Mazie Hirono, and Dick Durbin.
Two of the 17 signatories carry particular standing in this dispute. Warren, as Ranking Member of the Senate Banking Committee and a longtime critic of prediction markets, has been among the most vocal in calling for tighter federal oversight of the sector. Both New Mexico senators, Lujan and Heinrich, signed the letter days after their state became the eighth to be sued by the CFTC.
The CFTC is separately pursuing a Federal Register rulemaking on prediction-market “public interest” determinations, with public comments due July 27. The comment deadline and any appropriations markup give two near-term dates on which the regulatory balance could shift further.
