Seventeen Democratic senators have called on the Senate Appropriations Subcommittee to include a rider in the FY2027 spending bill that would bar the Commodity Futures Trading Commission from using federal funds to sue states over prediction-market regulation. The move escalates a jurisdictional dispute that now spans nine states, pitting state-level regulatory authority against federal oversight of event contracts.
The Defiant reports that the proposed rider targets the CFTC's ability to enforce federal rules on platforms operating in states that have passed their own prediction-market laws. This comes as the agency faces pressure on multiple fronts, including a separate bipartisan inquiry from Senators Adam Schiff and John Curtis, who asked CFTC Chair Michael Selig whether the regulator is investigating Polymarket's paid influencer scheme.
Senators Schiff and Curtis sent a letter Thursday seeking clarity on whether the CFTC is probing Polymarket's fake-bet campaign, which involved staged trades on an offshore platform. The regulator licenses Polymarket but faces jurisdictional limits, as the alleged scheme ran on a site beyond its direct reach. This puts the agency in a bind: it oversees the platform under existing law but must contend with activities that evade its enforcement net.
Market participants view the congressional push as a threat to CFTC autonomy. If the rider passes, it could limit the agency's ability to define the boundaries of event contract trading, potentially empowering state regulators to set their own rules. This fragmentation may create compliance challenges for prediction-market operators seeking consistent national standards.
Counterargument: Proponents of state-level regulation argue that local authorities are better positioned to address consumer protection concerns specific to their jurisdictions, and that limiting CFTC enforcement could foster innovation outside Washington's oversight. Critics of the rider warn it risks a patchwork of conflicting state laws that could hamper a nascent industry.