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Add Iowa’s attorney general to the list of AGs seeking reform to the prediction market industry.
Iowa Attorney General Brenna Bird joined 41 attorneys general to push the federal government toward state-level regulation of prediction markets like Kalshi and Polymarket.
Per a release by Bird’s office on Monday, her main focus is on prediction market outlets avoiding gambling taxes in Iowa.
“States have the right to govern their own gaming industry; historically, they’ve been successful at regulating gambling within their borders. Here in Iowa, our Legislature makes the laws, and the Iowa Racing and Gaming Commission enforces the laws, including the payment of any taxes required.
“These companies are trying to get around those state regulations and taxes. Several courts have agreed with the request of this coalition already that sport-related prediction market companies should be subject to an individual state’s gambling rules.”
Swaps or sports bets?
The Commodity Futures Trading Commission (CFTC) currently controls all regulatory authority over prediction markets. These markets, deemed as legitimate outlets for derivative swaps, are not subject to state jurisdiction or oversight.
An onslaught of litigation has landed in the laps of Kalshi and Polymarket after sports event contracts through prediction markets became popular over the last year, especially in states that haven’t legalized sports betting.
State gaming regulators claim the swaps are nothing more than sports wagering, which they contend falls under state authority.
CFTC maintains regulatory authority
CFTC Chairman Michael S. Selig, appointed by President Donald Trump, has steadfastly maintained that prediction markets are under his agency’s regulatory scope, and states have no role in overseeing swaps.
An ongoing lawsuit in Massachusetts on the CFTC’s authority to regulate the prediction market industry has reached the highest court in the commonwealth, which has been tasked with determining if Kalshi and Polymarket should face state-level regulations, like sports betting outlets.
The outcome of that case could set a precedent that impacts the industry.
