Preemption
The legal doctrine that federal law overrides conflicting state law, invoked by exchanges to argue state gambling laws cannot reach CFTC-regulated contracts.
The Commodity Exchange Act gives the CFTC "exclusive jurisdiction" over futures and swaps traded on a DCM. Kalshi's position is that an event contract is such a swap, so a state cannot ban it. States respond that the same statute lets the CFTC prohibit contracts involving gaming, which shows Congress did not intend to override state gambling law.
In 2026 the Third Circuit and the Ninth Circuit reached different conclusions, which is the kind of split the Supreme Court exists to resolve. A petition was filed in October 2026.
Until the question is settled, availability varies by state and by venue, and can change with a single ruling.
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Frequently asked questions
- What does "Preemption" mean?
- The legal doctrine that federal law overrides conflicting state law, invoked by exchanges to argue state gambling laws cannot reach CFTC-regulated contracts.
- Why does preemption matter for prediction markets?
- Until the question is settled, availability varies by state and by venue, and can change with a single ruling.