The core question: who gets to regulate them?
The whole fight comes down to jurisdiction. The Commodity Futures Trading Commission (CFTC) — the federal agency that oversees derivatives — argues that Congress gave it exclusive authority over event contracts, so states cannot apply their own rules. Several states counter that the platforms are enabling sports betting and gambling, which they have long regulated. That unresolved clash is why the same product can look federally sanctioned in one court and illegal in another (CBS News, cited above).
What the CFTC has done
The CFTC has gone on the offensive against the states. It has filed suit against nine of them — Arizona, Connecticut, Illinois, New York, New Mexico, Minnesota, Rhode Island, Wisconsin, Kentucky— seeking to block their enforcement actions and reaffirm that event contracts are federally regulated (CBS News, 2026-06-24). Separately, and cutting the other way, the CFTC has also opened a broad investigation into Polymarket's own business practices, including its social-media promotions (Tech Times, 2026-07-10). In other words, the federal regulator is simultaneously defending the platforms' right to operate and scrutinising how one of them operates.
What the states have done
On the other side, eighteen states have moved to block, ban, or restrict access under gambling law, and at least three have secured court injunctions that can halt user access entirely (Tech Times, 2026-07-05). The furthest-reaching action was Minnesota's: it was the first state to make it a felony to create, operate, host, or advertise a prediction-market platform, with penalties of up to five years in prison and a $10,000 fine, due to take effect 1 August 2026 — a law the CFTC, Kalshi and Polymarket each sued to block. They succeeded, at least for now: on 27 July 2026a federal judge granted a preliminary injunction, and FOX 9 reports the state is barred from enforcing the statute “until a final decision on the merits is reached in these cases” (FOX 9, 2026-07-27). That is interim relief, not a final ruling — the pre-emption question has not been decided. The detail is on the Minnesota injunction. Two days later the same argument lost: on 29 July 2026 a federal judge denied the CFTC a preliminary injunction against Wisconsin, with Coinpedia reporting the court found that registration with the CFTC does not automatically shield the platforms from state gambling laws (Coinpedia, 2026-07-29). That order is also interim relief, and it points the other way — the detail is on the Wisconsin ruling. Courts have split more broadly: the Third Circuit sided with Kalshi against New Jersey, while the Ninth Circuit went the other way for Nevada on 28 August 2026 — both are in the docket above.
State by state, at a glance
States the CFTC has sued (9)
Arizona, Connecticut, Illinois, New York, New Mexico, Minnesota, Rhode Island, Wisconsin, Kentucky — each sued by the CFTC to stop state-level enforcement against the platforms. (CBS News · as of 2026-06-24)
Minnesota — felony ban enjoined 27 July 2026
First state to criminalise operating or advertising a prediction market; the ban was due to take effect 1 August 2026 but a federal judge granted a preliminary injunction on 27 July 2026, so the state may not enforce it while the case proceeds. Interim relief — the merits are still pending. (FOX 9 · as of 2026-07-27)
Wisconsin — CFTC injunction denied 29 July 2026
Wisconsin sued five platforms in April; the CFTC sued the state in response. On 29 July 2026 a federal judge refused the CFTC a preliminary injunction, so the state is not restrained from enforcing its gambling laws while the federal case proceeds. Interim relief refused — the merits are still pending. (Coinpedia · as of 2026-07-29)
~18 states — some form of block or restriction
Eighteen states have taken action under gambling law, and at least three have won injunctions that can halt user access. (Tech Times · as of 2026-07-05)
This is a neutral summary of publicly reported actions and their dates. It is not a determination of whether any particular person may legally trade in any state — the position differs by jurisdiction and is changing.
What a ban or wind-down means for a live market
A ban or injunction usually restricts access for users located in the affected state rather than voiding contracts everywhere else. Where a platform is required to block a state or wind down there, the practical effect for someone in that state is that they may lose the ability to open, hold, or exit positions on that venue. How open positions are handled then depends on each platform's own rules and the exact terms of the court order. None of that changes the underlying probability a market is pricing — it changes who is permitted to access it. This is public regulatory context, not advice about any account.