A White House official confirmed to The Post that the warning was sent to all staffers in an email from the White House Management Office on March 24.

A day earlier, anonymous accounts made a blitz of trades just 15 minutes before President Trump announced a pause on strikes on Iran for five days, according to the Wall Street Journal. In less than two minutes, more than $760 million worth of oil futures contracts had changed hands, Dow Jones Market Data showed.

The White House warned staffers not to use insider information to place bets on prediction markets. Getty Images

Then, three accounts on Polymarket raked in more than $600,000 this week by correctly betting on the timing of the ceasefire. The identity of the traders remains unknown.

Polymarket did not immediately respond to The Post’s request for comment.

Prediction markets like it and Kalshi allow traders to wage bets on everything from politics, sports and pop culture to the likelihood of the president saying “Sleepy Joe” or “Trump Derangement Syndrome” on a certain day.

Critics have been quick to blast the perfectly-timed wartime trades as instances of insider trading, and members of Congress have recently introduced several bills seeking to restrict public officials’ use of futures markets.

Ethics rules already ban government workers from using insider scoops for personal gain and from gambling while on federal property, but critics have argued that’s not enough.

“President Trump has been crystal clear: while he seeks a strong and profitable stock market for everyone, members of Congress and other government officials should be prohibited from using nonpublic information for financial benefit,” White House spokesman Davis Ingle told The Post.

“The only special interest that will ever guide President Trump is the best interest of the American people,” Ingle said.

A flurry of suspicious trades were made 15 minutes before President Trump announced a pause on strikes on Iran. Westend61 – stock.adobe.com

He added that any implication that Trump administration officials have engaged in insider information is “baseless and irresponsible reporting.”

In January, an unknown trader won more than $400,000 from bets that Venezuelan dictator Nicolás Maduro would soon be out as leader – less than five hours before his capture by US forces.

Bettors reaped $54 million from wagers on former Iranian Supreme Leader Ayatollah Ali Khamenei’s ouster that were placed before he was killed in US-Israeli air strikes.

Kalshi is currently being sued for refusing to pay out those winnings, arguing that the bets do not count because the platform does not allow wagers related to death.

Meanwhile, Israel has arrested several people – including military reservists – for allegedly using classified information to place bets on Polymarket about military strikes.

Polymarket accounts raked in more than $600,000 this week by correctly betting on the timing of the ceasefire. AFP via Getty Images

US states have argued that the increasingly popular markets are the same as online gambling platforms, which require approval for state licenses and bans on users under 21.

Arizona, Connecticut and Illinois are currently fighting for the ability to restrict prediction markets.

New Jersey’s efforts to do the same recently suffered a major setback when a federal appeals court ruled Kalshi is under the exclusive jurisdiction of the US Commodity Futures Trading Commission.

Last month, Kalshi and Polymarket added new anti-insider trading rules to their platforms as members of Congress introduced a flurry of legislative proposals aimed at the new markets.

Sens. John Curtis (R-Utah) and Adam Schiff (D-Calif.) have pushed legislation to hand over control of prediction markets to state regulators, while lefty California Gov. Gavin Newsom banned state-appointed officials with insider information from using the markets.

Prediction markets like Kalshi and Polymarket allow traders to wage bets on politics, sports and pop culture. NurPhoto via Getty Images

Rep. Seth Moulton (D-Mass.) also announced a ban on prediction markets among his office staffers, and last week blasted a Polymarket contract linked to the rescue mission of a US service member whose plane was shot down over Iran. 

“They could be your neighbor, a friend, a family member. And people are betting on whether or not they’ll be saved,” Moulton wrote in a post on X. “This is DISGUSTING.”

In a response to Moulton’s criticism, Polymarket wrote: “We took this market down immediately as it does not meet our integrity standards. It should not have been posted, and we are investigating how this slipped through our internal safeguards.”

Sens. Richard Blumenthal (D-Conn.) and Andy Kim (D-NJ) also introduced legislation that would ban prediction markets related to war or military action.

Dems have also taken aim at the Trump family’s ties to prediction markets, since Donald Trump Jr. is an adviser to both Kalshi and Polymarket.

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A blunt assessment from former Commodity Futures Trading Commission Special Counsel Peter Sanchez Guarda cuts through the noise around an intensifying legal fight that could redraw the line between finance and gambling in the United States.

Guarda, who now runs Peter Sanchez Guarda Consulting and Turnkey Family Office, points to a moment of real uncertainty as federal agencies take the unusual step of suing several states, including Arizona, Connecticut, and Illinois.

He describes an environment shaped by a business-friendly federal posture toward emerging financial models. “The current administration has signaled that it is very pro-business and wants to make it as easy as possible for these new fintech business models such as prediction markets and crypto to operate,” Guarda said. He also noted the unusual makeup of the regulator itself. “The CFTC has only one person on the five-member commission now, so it’s easier for him to enact his agenda if there is no chance of being outvoted.”

Federal regulators CFTC and DOJ supports prediction markets in fight against states

The lawsuits come after states escalated enforcement against platforms like Kalshi, issuing cease-and-desist orders and, in Arizona, pursuing criminal charges tied to sports-event contracts. There appears to be a fundamental disagreement as states argue these products amount to illegal gambling, while federal regulators insist they are legitimate derivatives governed under federal law, and therefore beyond the reach of state gaming regimes.

If anything (besides securities) could be traded on CFTC exchanges with exclusive jurisdiction, then could you argue that you can buy or sell real estate, oil paintings, used cars, home insurance, etc., and the CFTC would have exclusive jurisdiction? If those aren’t allowed because they aren’t a commodity, then sports betting isn’t either if the courts determine they are not commodities, under the definition in the CEA. 

Peter Sanchez Guarda, former CFTC Special Counsel

Rather than leaving companies to fight those battles alone, the federal government has stepped in directly. “In the past when the CFTC has asserted its jurisdiction in squabbles with other regulators like the Securities and Exchange Commission, it has not done so directly,” Guarda said. “This strategy of suing directly is unprecedented.”

The shift is thought to be tactical. “By suing directly the CFTC has moved the battleground from state court to federal court,” he explained, adding that it could strengthen the position of prediction market operators facing criminal exposure. They may argue “that they thought that they were operating legally because they went through the process to obtain a license and were relying on the opinion of the CFTC.”

Courts divided as legal questions deepen

A federal judge recently allowed Arizona’s case against Kalshi to proceed, denying a preliminary injunction and drawing attention to the fact that courts are not uniformly siding with the industry. Across the country, more than a dozen similar disputes are unfolding, with different jurisdictions reaching different conclusions, raising the prospect of a fractured legal landscape.

The question is whether federal law overrides state gambling regimes, but even here, the legal footing is shaky. “It’s not a slam dunk at all,” Guarda said. The Commodity Exchange Act (CEA) gives the CFTC “exclusive jurisdiction” over certain products, but only if they qualify as commodities—a point that remains contested.

“Even from the beginning, there has been disagreement by CFTC commissioners… regarding whether event contracts are commodities,” he noted. That uncertainty raises broader questions about the limits of federal oversight. “If anything… could be traded on CFTC exchanges with exclusive jurisdiction, then could you argue that you can buy or sell real estate, oil paintings, used cars?” he said. “If those aren’t allowed because they aren’t a commodity, then sports betting isn’t either if the courts determine they are not commodities.”

CFTC prediction markets lawsuits shows path toward the Supreme Court

The litigation strategy itself appears designed to force a decisive ruling. “The industry is eager to set up a Supreme Court showdown,” Guarda said, pointing to cases being spread across multiple jurisdictions to increase the odds of conflicting appellate decisions, which are often a trigger for review by the Supreme Court of the United States.

There is also a geographical logic to the cases. “It looks like they were carefully chosen,” he said, stating how Arizona, Connecticut, and Illinois map onto influential federal circuits tied to major financial centres, while also offering procedural advantages for getting cases heard.

The push comes as the CFTC itself faces scrutiny. Lawmakers have questioned staffing cuts at the agency, particularly in Chicago, even as it takes on a growing number of complex cases. At the same time, recent agency guidance appears to show a more pragmatic, permissive approach to sports prediction markets, as Guarda states, suggesting regulators are increasingly focused on shaping, rather than shutting down, the sector.

Even if the Supreme Court of the United States ultimately intervenes, the outcome may be narrower than expected. “If it’s a win for the prediction markets it’s unlikely to preempt state gambling regulations,” he said. Instead, any ruling would likely be “narrowly framed for ‘event contracts’ on CFTC regulated exchanges.”

For now, regulators, states, and industry players remain locked in a high-stakes fight over who controls the future of prediction markets and how far financial markets can stretch into the territory of betting. As Guarda put it: “Perhaps a team making it to the playoffs would be an allowable wager because it could affect hotel occupancy rates… But maybe betting on who makes the first scoring shot in a basketball game would not, because there is no business risk that would be hedged.”

Featured image: Canva

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When Professor Steven Light said that in a recent ReadWrite interview, it landed with weight. He was sitting next to fellow Professor Kathryn Rand, his longtime collaborator on tribal gaming law and co-author of Indian Gaming Law and Policy, and the two were talking through a change that feels both sudden and far-reaching. Prediction markets, once a niche corner of finance, are now pushing into space long defined by tribal and state gaming systems.

The platforms allow users to trade contracts on the outcome of real-world events, from sports games to elections, in ways that can closely resemble traditional betting. However, they are forcing new questions about sovereignty, regulation, and who really controls the rules.

This tension was hard to miss at last week’s Indian Gaming Association Tradeshow and Convention. Tribal leaders, regulators, and industry voices gathered as legal disputes continue to intensify and uncertainty grow. 

“Today, our Board took decisive action to protect what generations before us fought to build,” IGA Chairman David Z. Bean said at the conference. “These so-called prediction markets are an attempt to bypass tribal authority and recast gambling as a financial product. We will not allow that. We will stand united to defend tribal sovereignty and the integrity of Indian gaming.”

The expansion of federally regulated event-based trading platforms has become one of the most urgent issues in Indian Country. Prediction markets have been seen to bypass the very frameworks tribes have spent decades building and defending, including IGRA compacts and recent enforcement wins against sweepstakes-style operators.

Prediction markets present a growing challenge to established Indian tribal gaming frameworks

For Rand, who is a visiting professor at Boyd Law, the concern is immediate. “I think that it’s fair to say that prediction markets are a threat to tribal gaming,” she said. This ties directly back to the Indian Gaming Regulatory Act, the 1988 law that shaped modern tribal gaming. IGRA depends on a shared system where states and tribes negotiate compacts that govern operations and revenue.

If we accept that prediction markets are effectively gaming, then they operate in a way to remove that governmental authority from both states and tribes.

Professor Kathryn Rand

In this case, prediction markets may be stepping outside that system altogether.

“If we accept that prediction markets are effectively gaming,” Rand explained, “then they operate in a way to remove that governmental authority from both states and tribes.” In practical terms, federally regulated platforms, primarily overseen by the Commodity Futures Trading Commission (CFTC), could offer products that look and feel like sports betting without following the same rules or contributing to the same revenue structures.

From the CFTC’s perspective, prediction markets fall under existing derivatives law, offering a regulated alternative to offshore betting and potentially improving market efficiency by aggregating information about future events. It may help explain why federal authorities have been more willing to assert jurisdiction, even as states and tribes push back.

And we’ve seen this playing out in recent days, having reported that the CFTC and the Department of Justice are taking legal action against states such as Arizona, Illinois, and Connecticut over attempts to limit prediction markets. This indicates a more aggressive federal stance in an area traditionally controlled at the state and tribal level.

Light sees this as a potential crack in what he and Rand have long called the “casino compromise,” the balance IGRA created among tribal sovereignty, state oversight, and commercial interests. “That balance has largely held over the last several decades,” he said. “We don’t want to be apocalyptic about it, but it is true that they are a current and imminent and real threat that tribes see to that balance.”

The stakes extend well beyond legal theory. Tribal gaming remains the main economic engine for many tribal governments, supporting essential services like healthcare, housing, education, and public safety. As Rand put it, “most tribes have gaming as their primary economic driver and job creation in a relatively constrained economy.”

Economic impact and rising federal pressure

The financial importance of that system is clear in places like Arizona. Tribal casinos there contributed $33.4 million to the state’s Benefits Fund in just the third quarter of fiscal year 2026, which is an 8.3% increase from the previous year. These funds flow into education, emergency services, wildlife conservation, tourism, and programs addressing problem gambling.

Since 2004, total contributions from tribal gaming in Arizona have reached about $2.5 billion, showcasing a long-standing partnership between tribes and the state.

The vast majority of tribes won’t be able to simply pivot to another equally effective route of economic development.

Professor Kathryn Rand

In this context, the timing of federal action stands out. Just days after Arizona reported its latest contribution figures, it became a target in a federal legal challenge tied to prediction markets. For many tribal stakeholders, the overlap reinforces a growing concern that a stable, heavily regulated system is now being challenged by a newer market operating under a different set of rules.

“The vast majority of tribes won’t be able to simply pivot to another equally effective route of economic development,” Rand warned. If prediction markets draw users away without sharing in revenue obligations, the long-term consequences could be significant.

The ongoing discussion centers on whether prediction markets count as gambling.

“Public policy to some extent drives how we define what is gambling,” said Rand. If these platforms fall outside that definition, they could avoid safeguards designed to ensure fairness, prevent underage participation, and limit problem gambling.

From a user’s perspective, though, the difference is not always obvious. Contracts tied to sports, elections, or entertainment outcomes often behave in ways that are “very similar, if not identical, to sports betting,” Rand noted.

Light takes that idea further, pointing to how quickly the scope is expanding. “What this is doing is opening up a new space,” he said, where people can wager on everything from awards shows to political events—areas historically kept outside regulated gaming.

Prediction market regulation struggles to keep pace with ongoing change

This is not the first disruption tribal gaming has faced. In recent years, tribes have successfully pushed back against sweepstakes-style operators that tried to exploit gray areas, which often relied on alliances between tribes, states, and commercial operators, with a shared focus on consumer protection.

Rand believes a similar approach could emerge again. “This is an opportunity for states and tribes… to find common ground,” she said, especially around fairness and consumer safety.

But prediction markets are a tougher challenge because they come with federal backing, at least in part, complicating enforcement and raises deeper jurisdictional questions.

“It’s incredibly difficult to legislate ahead of technology,” Light said, comparing the moment to earlier debates over online poker and digital gaming. Innovation has always moved faster than regulation, but the current pace feels different.

“The suddenness with which prediction markets have come on in the last year or so,” Light noted, along with strong adoption among younger users, has created a situation where regulators are struggling to catch up.

For tribes already working through the shift to mobile wagering and iGaming, that creates another layer of uncertainty. “Prediction markets arguably are pulling the rug out from under that process,” Rand said. Years of negotiation and investment tied to mobile betting frameworks could be undermined by a parallel system that operates outside those agreements.

The dispute is now unfolding on several fronts. Tribal organizations have filed amicus briefs against platforms like Kalshi. Lawmakers are introducing bipartisan bills to clarify regulatory authority. Members of Congress are also questioning whether current offerings align with federal law, even as enforcement remains uneven.

For Light, the issue reaches beyond gaming into the wider balance of power in the U.S. system. “This aligns with… an assertion of federal power,” he said, describing recent actions as “new ground” in how authority is divided among federal, state, and tribal governments.

Rand shares that concern and questions the policy rationale behind the federal approach. “There doesn’t seem to be a clear public policy supporting the federal position on this,” she said, especially when compared with the established goals behind tribal and state gaming systems.

Those goals—economic development, consumer protection, and sovereignty—remain central. Tribal gaming has long been a foundation for self-determination and governance.

“If we have a threat to that source of revenue, that’s significant,” Rand said. The implications go beyond dollars to control itself. If prediction markets can operate outside tribal jurisdiction, it raises broader questions about what comes next.

“That also suggests that there could be other activities… that tribes simply would not have control over,” she added.

Looking ahead, both Rand and Light expect the conflict to intensify. Legal battles are likely to continue, and the issue could ultimately reach the Supreme Court as competing interpretations of federal authority collide.

For now, prediction markets are growing quickly, federal agencies are asserting their role, and tribes are weighing how best to respond.

That aligns with the current administration’s general approach to federalism today, which is almost turning the last couple of decades of federalism on its head, where conservatism (small ‘c’) in the US and Republicans (big ‘R’) in the US were oriented toward pushing power back to the states and therefore often to tribes as well to their benefit.

Professor Steven Light

Light’s opening comment captures the moment. What’s happening appears to be a turning point that could redefine how tribal sovereignty operates in a digital economy where even the definition of gaming is in flux.

And as both scholars make clear, the stakes are real. They touch on economic stability, legal authority, and the future of self-determination for tribal nations.

Featured images: via LinkedIn

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Authorities approved the license for Predict Street Ltd on March 26, formally adding the company to the territory’s register of betting intermediaries. The move was announced in parliament by Justice, Trade and Industry Minister Nigel Feetham, who framed it as part of a broader strategy to modernize Gibraltar’s regulatory framework and reduce reliance on traditional gaming revenues.

While Gibraltar is in the process of overhauling its gambling laws, officials processed the application under existing legislation. A more comprehensive reform bill, designed to strengthen oversight and bring the jurisdiction in line with evolving global standards, has yet to come into force.

Fast-tracked approval draws attention

The pace of the approval caught lawmakers’ attention, with Feetham highlighting what he described as an unusually quick regulatory turnaround.

We expect this to be a substantial area of growth for Gibraltar,” he said during the parliamentary session, calling the approval a case of “record timing” for a license of this kind.

The speed signals a sense of urgency within government. Gibraltar is moving aggressively to position itself at the forefront of emerging digital sectors, particularly as uncertainty clouds its traditional revenue streams.

Mounting pressure on a gambling-dependent economy

For years, Gibraltar has leaned heavily on online gambling, which accounts for roughly one-third of government revenue and supports a significant share of local employment.

But that model is facing strain. Rising gambling duties in the United Kingdom, a key market for Gibraltar-based operators, have driven up costs and squeezed margins. The changes have forced companies to reassess their operations and raised broader concerns about the territory’s long-term economic stability.

In response, policymakers have begun actively seeking new growth areas. Feetham has taken a more visible, hands-on role in promoting Gibraltar as a competitive regulatory hub, particularly for emerging technologies.

“We are working relentlessly to protect Gibraltar’s economic interests,” he said in a separate statement, underscoring the government’s proactive stance.

A strategic push into prediction markets

Prediction markets allow users to trade on the outcomes of real-world events, blurring the line between financial instruments and traditional betting products. That hybrid nature has made them difficult to classify, leaving regulators worldwide divided. By licensing Predict Street, Gibraltar is positioning itself among the first European jurisdictions to formally embrace the sector.

Elsewhere, the approach has been far more cautious. Regulators in countries such as Germany, France, and the Netherlands have restricted or blocked prediction market platforms, reflecting ongoing uncertainty about how to regulate them.

Global regulatory tensions intensify

The debate over prediction markets is also heating up globally.

In the United States, the Commodity Futures Trading Commission has recently sued three states (Arizona, Connecticut, and Illinois), marking a new chapter in the ongoing debate over prediction markets and who should regulate them.

At the same time, some states are exploring clearer regulatory frameworks. Iowa, for example, has advanced legislation aimed at defining and potentially permitting certain types of prediction market activity. Meanwhile, tribal gaming groups have voiced concerns about federal encroachment into areas traditionally governed by state and tribal authorities.

Predict Street eyes a global opportunity

Predict Street operates as a crypto-based platform backed by Abu Dhabi blockchain firm ADI Chain. The company is targeting a public launch on April 9 and has already begun onboarding early users.

It is also leaning heavily into sports marketing, branding itself as the “Official Prediction Market Partner” of the FIFA World Cup 2026 in an effort to capture global attention ahead of the tournament.

Still, significant hurdles remain. Access to major markets such as the UK could prove challenging if regulators ultimately classify prediction markets as gambling products, subjecting them to stricter rules and higher compliance costs.

A calculated risk for a changing industry

For Gibraltar, the decision to license Predict Street reflects a calculated bet on the future of digital finance and gaming.

The move underscores a broader shift. Rather than waiting for global regulatory consensus, the territory is choosing to act early and shape its own position in a fast-evolving market. Whether that strategy pays off will depend largely on how other regulators respond and whether prediction markets can secure a stable footing within the global regulatory landscape.

Featured image: Berthold Werner, CC BY-SA 3.0 https://creativecommons.org/licenses/by-sa/3.0, via Wikimedia Commons

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The proposal lays out a structure for companies offering what it calls event-driven contracts. These are financial products that pay out based on whether a specific future event happens or not. The bill spells out a wide range of qualifying events, including sports contests, lotteries, elections, legislative decisions, and key economic data points.

Under the measure, companies would need a state-issued permit before operating in Iowa. That entry comes at a steep cost, with an initial fee set at $20 million and annual renewals priced at $100,000.

Prediction markets to face new taxes and regulatory framework under Iowa bill

A central piece of the legislation is a new tax aimed at platform operators. The bill sets a 20% tax on adjusted yearly revenue generated from these contracts. The legislation defines adjusted revenues as “the total charges and fees collected…less payouts made to traders,” with further adjustments based on the share of activity tied to Iowa users.

All of that tax money would flow into the state’s general fund.

The proposal also shifts responsibility onto companies to handle tax withholding for users. It treats payouts as Iowa-earned income and requires operators to withhold and send those taxes directly to the state. On top of that, it changes how traders calculate gains and losses for state taxes, forcing them to recompute certain figures rather than rely on federal tax treatment.

Lawmakers added a fallback plan in case the primary tax structure runs into legal trouble. If courts strike it down or block enforcement, the state would instead impose a 20% tax on each contract purchase. This would only kick in after a final court ruling and all appeals are exhausted.

The bill sets its first tax period from July 1 through the end of 2026, with standard calendar-year taxation after that.

The move comes as legal and political pressure builds around prediction markets. Kalshi, a federally regulated exchange, has already sued Iowa, arguing that federal oversight through the Commodity Futures Trading Commission preempts state-level restrictions. 

At the same time, Iowa lawmakers are advancing a separate effort to strengthen gambling enforcement. It would target unlicensed or unregulated betting-like activities.

Featured image: Canva

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Federal officials argue event contracts fall under their authority when they trade on registered exchanges. State regulators see something else entirely, calling them unlicensed gambling. 

The cases seen by ReadWrite stem in part from recent enforcement moves. In Illinois, regulators sent cease-and-desist letters to firms including Kalshi and Robinhood, arguing their sports-related event contracts amount to unlawful wagering without proper state licenses. Connecticut officials made similar claims, saying companies were “conducting unlicensed online gambling” by offering these contracts to residents.

The @CFTC has clear and longstanding exclusive jurisdiction to regulate prediction markets. But recently, state regulators have tried to impose inconsistent and contrary obligations on CFTC-registered prediction markets. In response, the CFTC and @TheJusticeDept today filed three…

— Mike Selig (@ChairmanSelig) April 2, 2026

However, CFTC Chairman Michael Selig stated in a press release that the agency would “continue to safeguard its exclusive regulatory authority over these markets and defend market participants against overzealous state regulators.

“This is not the first time states have tried to impose inconsistent and contrary obligations on market participants, but Congress specifically rejected such a fragmented patchwork of state regulations because it resulted in poorer consumer protection and increased risk of fraud and manipulation,” he added.

CFTC and DOJ challenge states over prediction markets ban

The federal complaints lean heavily on the Commodity Exchange Act. According to the filings, the law “provides a comprehensive regulatory framework for the regulation of derivatives transactions in the United States” and gives the CFTC “exclusive jurisdiction” over products like futures, options, and swaps listed on regulated exchanges.

Officials argue that event contracts fit squarely within that framework when structured as derivatives. The filings describe them as instruments that “enable parties to trade on their predictions about whether a future event…will occur,” spanning areas like “economics, or elections, or climate, or sports.”

States are pushing back with a different interpretation. Illinois regulators, for example, said it is illegal to run platforms that allow users to “make a wager upon the result of any sport, game, contest, political nomination, appointment, or election…without an [Illinois Gaming Board]-issued license.” Connecticut authorities have taken a similar stance.

The lawsuits also draw on history, pointing out that futures trading was once treated as gambling in some jurisdictions before Congress stepped in to centralize oversight. Lawmakers ultimately handed the CFTC exclusive authority in 1974 to avoid what they warned could become “total chaos” from overlapping rules.

Recent developments have added urgency. The CFTC has been weighing guidance and potential rulemaking around sports-related prediction markets, while also attempting to have a more pragmatic approach in recent advisory discussions. At the same time, legal debates have expanded beyond these states, including outside support for prediction markets in filings tied to Nevada disputes.

A ruling against the federal government might limit the agency’s reach and reinforce state control over anything resembling sports betting. A decision in favor of the CFTC would strengthen a single national framework, and likely clear the way for wider expansion of event-based derivatives.

Featured image: Canva

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In a March 26 order, Shalina D. Kumar of the United States District Court for the Eastern District of Michigan signed off on a stipulation jointly submitted by Coinbase Financial Markets Inc. and state officials. The agreement resolves a dispute over recent filings tied to Coinbase’s request for a preliminary injunction and sets a revised schedule for additional briefs.

Detroit looks to file an amicus curiae brief

Potentially the biggest development in the latest order is Detroit’s planned involvement in the case. City officials approached both parties seeking permission to file an amicus curiae brief, a filing that allows a non-party to offer the court additional context, expertise, or legal arguments.

Both sides agreed to the request, and the court’s order allows Detroit to submit its brief by April 3.

If the city ultimately argues against prediction markets, it would be the first time a U.S. municipality has taken a direct legal stance opposing the products. That could provide courts and regulators with a new perspective, particularly on how emerging wagering-style platforms affect communities at the local level.

The City of Detroit is poised to become the first municipality to come out against prediction markets. The Motor City has been granted permission by a federal judge to file an amicus curiae brief in support of Michigan’s opposition to Coinbase’s motion for preliminary injunction. pic.twitter.com/6tMW3YcaBU

— Daniel Wallach (@WALLACHLEGAL) March 27, 2026

Coinbase challenges state enforcement

The underlying lawsuit pits Coinbase against Dana Nessel and members of the Michigan Gaming Control Board, who are being sued in their official capacities.

Coinbase is seeking a preliminary injunction, which is a temporary court order that, if granted, would prevent Michigan from taking enforcement action while the judge considers the broader legal questions in the case. Such injunctions are typically sought when a company argues that immediate regulatory action could cause irreparable harm before the courts have fully resolved the dispute.

Filing dispute leads to revised briefing schedule

The procedural disagreement that prompted the latest order began in February, when Coinbase filed additional materials with the court, including a notice of supplemental authority and a motion requesting permission to respond to a proposed sur-reply from the defendants. The company also attached a lengthy exhibit outlining its planned response.

State officials objected to those filings on March 2, arguing they were improper. After further discussions, however, the parties reached a compromise: the state withdrew its objection and instead agreed to submit a formal response addressing the materials.

Under the court-approved stipulation, that response was due March 27. Judge Kumar’s order formally adopts the agreed terms, putting the revised briefing schedule into effect.

Prediction markets face growing legal scrutiny

The dispute is unfolding against a backdrop of increasing national scrutiny of prediction markets, particularly contracts tied to sports outcomes. In Washington, D.C., bipartisan lawmakers have introduced legislation that would ban sports-related prediction markets, citing concerns that the products function too similarly to unregulated sports betting.

Courts across the country have also begun to issue diverging rulings. Examples of this include a judge in Nevada recently blocking certain event contracts offered by Kalshi, while a federal judge in Arizona declined to grant emergency relief that would have protected similar contracts from potential criminal enforcement.

Together, those decisions have contributed to a patchwork of legal outcomes that leaves the status of prediction markets unsettled across jurisdictions.

Municipal perspective could influence broader debate

Detroit’s anticipated filing could carry weight beyond the immediate dispute between Coinbase and Michigan regulators. Cities are often the first to deal with the social and economic consequences of gambling activity, from problem gambling services to local enforcement concerns.

Detroit could help the court assess the potential community-level impacts of prediction markets as it decides whether Coinbase should receive the temporary protections it is seeking, and, more broadly, how these emerging financial products should be treated under existing gambling and commodities laws.

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Sen. Chris Murphy and Rep. Greg Casar introduced what they call the Banning Event Trading on Sensitive Operations and Federal Functions Act, or the BETS OFF Act. Their proposal would block betting platforms from offering contracts tied to government actions or situations where insiders might already know, or directly influence the outcome.

“These are fundamentally corrupt markets. They are rife with insider trading, and they offer incredibly perverse incentives, especially inside government, for government actors to push official decision-making towards their financial interests.” – @ChrisMurphyCT @RWW

— Suswati Basu (@suswatibasu) March 17, 2026

Murphy argued that these markets create dangerous incentives and open the door to abuse by people with privileged information.

“These are fundamentally corrupt markets. They are rife with insider trading, and they offer incredibly perverse incentives, especially inside the government,” Murphy said at a press conference introducing the bill.

If passed, the legislation would limit prediction market platforms such as Polymarket and Kalshi from listing bets related to official government decisions or events controlled by specific individuals.

Lawmakers announce BETS OFF Act amid concerns about insider information and war betting

Murphy pointed to a recent burst of betting activity surrounding U.S. military action against Iran as a major reason lawmakers decided to act now.

According to the senator, prediction markets saw unusually large wagers placed just a day before the United States carried out strikes against Iran.

“There was a series of very specific bets that were made… on the United States attacking Iran the following day,” Murphy said. “Those bets paid off to the tune of over $100,000 at a minimum for each of the individuals who placed those bets.”

Murphy said many of the accounts responsible for the wagers were created the same day the bets were placed, raising concerns that someone with advance knowledge of the attack may have used the markets.

“It seems pretty clear what happened. People inside the White House, or very close to the White House, with knowledge of the attack that was imminent, cashed in,” he said.

Casar echoed those concerns, arguing that prediction markets could allow people close to sensitive decisions, including military operations to profit from them.

“We shouldn’t live in a country where someone sitting in the Situation Room… could have hundreds of thousands of dollars riding on the decision,” Casar said.

Casar said roughly 150 accounts placed unusual wagers predicting the war would begin the next day. Of those, he claimed 109 accounts bet more than $10,000 and 16 reportedly earned more than $100,000. One bettor allegedly walked away with nearly $500,000.

The BETS OFF Act would prohibit betting markets tied to terrorism, assassination, war, and official government actions. It would also bar contracts involving events where a single person controls the outcome or where insiders could reasonably know the result before the public.

Lawmakers also cited other examples they consider problematic, including bets on which words a politician might use in a speech, predictions about Super Bowl halftime performers, or wagers on announcements that insiders already know in advance.

In one case, bettors on Polymarket allegedly sent death threats to Israeli journalist Emanuel Fabian after his reporting about an Iranian missile strike affected a high-stakes betting contract. Fabian said routine war coverage triggered “days of harassment and death threats” after gamblers demanded he change the report to influence the market outcome.

Murphy argued those kinds of markets mislead users into believing the bets are fair.

“Gullible consumers get conned into placing bets on markets where the outcome is knowable, where they are essentially bound to lose,” he said.

Prediction markets have expanded exponentially and attracted growing regulatory scrutiny. Supporters say the platforms can produce useful forecasts by aggregating public information, while critics warn they create opportunities for manipulation.

Murphy said the new proposal is part of a wider push in Washington to rein in betting tied to sensitive real-world events.

“When the market is inherently and almost certainly rigged, that should be a place where people are protected from what is… pretty regularly outright fraud,” he said.

Featured image: Senator Chris Murphy via YouTube

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For years, prediction markets, or the like, have tested the edges of US financial regulation. That said, the CFTC’s latest announcement does not exactly settle that discussion. Instead, it sketches out how exchanges should manage sports-related contracts if they are ultimately allowed to exist.

The advisory represents a pragmatic shift. By referring to Designated Contract Market (DCM) Core Principles, the CFTC is saying ‘if this is allowed, it must be done like other products in our markets.’ In practical terms, this signals that the Commission is open to these listings if the courts determine that they are legal and the CFTC has authority over them.

Peter Sanchez Guarda, former CFTC Special Counsel

To some observers, the tone matters.

Peter Sanchez Guarda, who spent more than two decades at the CFTC and previously served as Special Counsel, said the agency’s message appears more pragmatic than prohibitive. Rather than rejecting the concept outright, regulators seem to be laying the groundwork for oversight if courts decide the products are legal.

“The advisory represents a pragmatic shift,” Sanchez Guarda told ReadWrite. “By referring to Designated Contract Market (DCM) Core Principles, the CFTC is saying ‘if this is allowed, it must be done like other products in our markets.’”

Today, Sanchez Guarda runs Peter Sanchez Guarda Consulting and Turnkey Family Office. From his perspective, the communiqué reads less like a warning and more like early regulatory preparation.

“In practical terms, this signals that the Commission is open to these listings if the courts determine that they are legal and the CFTC has authority over them,” he said.

The document itself focuses on practical oversight issues. Exchanges that list sports event contracts, the agency said, should think carefully about surveillance, contract design, and ways to protect market integrity. This comes as prediction markets gain attention across the US, particularly on platforms with contracts tied to real-world outcomes such as elections, economic indicators, and sports competitions.

Legal ambiguity around gaming definitions for prediction markets

One of the biggest questions hanging over sports prediction markets comes down to a single word ie. gaming.

Current CFTC rules generally bans contracts tied to gaming or activities deemed contrary to the public interest. But the law offers surprisingly little guidance about what gaming actually means.

For the past year, a lot of these products exploded in popularity – now is the time to put out guidance and make sure that we’re not regulating by enforcement like the Biden administration did. We’re setting standards and making clear what the @CFTC’s statue says.… pic.twitter.com/XjIXGlbwcf

— Mike Selig (@ChairmanSelig) March 12, 2026

Sanchez Guarda said the resulting legal debate has become highly technical.

“This is one of those ‘how many angels fit on the head of a pin’ debates,” he said.

The rule at the center of the issue, Rule 40.11, bars certain contracts linked to gaming. Yet neither the rule nor the wider Commodity Exchange Act lays out a clear definition.

The gap has become a focal point in disputes between regulators and companies operating prediction market platforms.

“The only federal statute that defines ‘gaming’ is the Indian Gaming Regulatory Act,” Sanchez Guarda said. “But IGRA only applies on Indian land, not the rest of the US.”

He added that critics of sports event contracts tend to raise another argument, which is that these markets may not meet the Commodity Exchange Act’s definition of a commodity at all.

This particular concern surfaced when the CFTC previously approved one of the earliest event contracts. In that case, the decision passed by a narrow margin, with two commissioners issuing dissenting opinions questioning whether the contracts truly fit within the agency’s authority.

CFTC advisory attempts to address integrity concerns and manipulation risks

Beyond legal definitions, regulators also worry about the potential for manipulation.

The advisory specifically flags risks tied to contracts that hinge on narrow or highly specific outcomes inside a game. These types of bets may be far more challenging for exchanges to monitor than contracts based on broader results.

Sanchez Guarda said the difference is significant.

[There] is nothing in the legislative history of the CEA to suggest that it was intended to take authority for sports betting away from the 50 states, and give it to a small agency that most people have never heard of.Peter Sanchez Guarda, former CFTC Special Counsel

“Monitoring ‘single-incident’ outcomes, like a specific player’s performance, is significantly more difficult than monitoring a final game score,” he said.

When a contract focuses on a small moment inside a game, the opportunity for manipulation can increase. A player might influence the outcome of a narrowly defined bet without affecting the final score or the overall result of the match.

From a regulator’s standpoint, these scenarios create serious monitoring challenges.

“The CFTC doesn’t have the staff to police that,” he said, especially in light of cuts to services. “And if prediction markets let you bet on anything, how will the exchanges have enough staff to monitor everything that happens in the world and detect if someone knew something and bet on it?”

The concerns are one reason the guidance reiterates surveillance responsibilities for exchanges that list event-based contracts. The agency appears to be indicating that monitoring systems and integrity controls would need to match the complexity of the markets themselves.

Federal oversight versus state betting systems

Another layer of tension involves the relationship between federal financial regulators and state gambling authorities.

Sports betting is already legal in many states, where it operates under detailed licensing systems and often generates significant tax revenue. If federally regulated exchanges begin offering sports event contracts nationwide, that could overlap with, or potentially compete with, those state markets. And that fight has already begun in multiple states such as Nevada, Ohio, and Iowa.

Sanchez Guarda said that possibility raises a wider question about congressional intent.

“There is nothing in the legislative history of the Commodity Exchange Act to suggest that it was intended to take authority for sports betting away from the 50 states and give it to a small agency that most people have never heard of,” Sanchez Guarda said.

In discussions about federal authority, he pointed to a principle frequently cited by the US Supreme Court.

“Congress doesn’t hide elephants in mouseholes,” he said.

The phrase reflects the idea that Congress typically spells out major regulatory changes directly, rather than embedding them indirectly in older statutes.

For critics of sports prediction markets, this suggests the CFTC may not have been meant to oversee what looks, to many people, like a new form of sports betting.

Prediction markets are one of the most exciting innovations in financial markets. Yet for too long, the @CFTC has failed to provide guidance for these markets being used by millions of Americans. This ends today.

Read what steps the agency is taking here…

— Mike Selig (@ChairmanSelig) March 12, 2026

Still, the legal landscape around agency authority has changed exponentially in recent years.

Courts historically have often deferred to federal agencies when interpreting ambiguous statutes. This was known as the Chevron doctrine. But in 2024, the Supreme Court overturned that precedent in the case Loper Bright Enterprises v. Raimondo.

The ruling means judges are now more likely to interpret statutory language independently rather than relying heavily on an agency’s reading of the law.

“The agency’s opinions about what the statute says don’t carry any special weight anymore,” Sanchez Guarda said.

The change could prove decisive as prediction markets expand. If disputes over sports event contracts reach federal courts, judges, rather than regulators, may ultimately decide whether these products belong under derivatives regulation or gambling law.

For now, regulators are sketching the rules of a market that may or may not survive. Whether sports prediction contracts become a new corner of Wall Street, or are shut down as gambling, is likely to be decided in court.

Featured image: Canva

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