Venture capital firm Andreessen Horowitz submitted an 18-page comment letter to the Commodity Futures Trading Commission on Friday, supporting the CFTC’s position against state-level crackdowns on prediction markets. According to the letter, a16z argued that state-level actions against prediction market platforms—including cease-and-desist letters and proposed bans—create a “serious barrier to impartial access” for users.
State vs. Federal Regulatory Conflict
The CFTC has filed a string of lawsuits against Illinois, Arizona, Connecticut, New York, and Wisconsin, arguing that these states are acting outside their jurisdiction by attempting to regulate markets overseen by the federal government. State regulators and attorneys general have countered by asserting that platforms like Kalshi and Polymarket offer unlicensed gambling products.
A16z’s comment letter specifically addressed the compliance burden created by fragmented state rules. The firm wrote: “Being forced to deny impartial access to users in states that seek to license or prohibit certain event contracts will likely severely circumscribe available liquidity.” A16z argued that requiring exchanges to block U.S. users based on their state of residence conflicts with the CFTC’s rules on fair access to markets.
CFTC Jurisdiction Assertion
CFTC Chairman Mike Selig has asserted that prediction markets’ event contracts qualify as swaps, placing them under the CFTC’s exclusive jurisdiction.
Market Utility and Transparency Arguments
Beyond the regulatory dispute, a16z highlighted the utility that prediction markets provide. The firm wrote that their pricing systems act as a “unique form of price discovery” that helps “reveal probabilities for uncertain events.”
A16z also argued that blockchain-based prediction markets offer greater transparency than traditional platforms, noting that the “auditability of onchain transactions” makes it easier for participants and regulators to monitor market activity.
Market Growth Context
In April, the leading prediction markets Polymarket and Kalshi saw their cumulative lifetime volumes cross $150 billion, following months of surging use.
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