a16z Urges CFTC Exclusive Oversight of Prediction Markets

Venture capital firm Andreessen Horowitz, known as a16z, filed an 18-page comment letter with the Commodity Futures Trading Commission on Thursday, urging federal regulators to assert exclusive oversight of prediction markets and preempt state efforts to restrict platforms such as Kalshi and Polymarket.

The submission responds to the CFTC's advance notice of proposed rulemaking on event contracts, which platforms use to trade outcomes of future events like elections or economic indicators. A16z argues that these contracts qualify as swaps under the Commodity Exchange Act, placing them under the CFTC's sole jurisdiction. This authority, the firm contends, overrides state gaming laws that have led to cease-and-desist orders, licensing demands and even criminal charges against operators.

State attorneys general in Illinois, Arizona, Connecticut, New York and Wisconsin have targeted the platforms, prompting the CFTC to sue those jurisdictions in recent weeks. The agency claims the states overstepped by regulating federally overseen markets. A16z echoed this, stating that forcing exchanges to block users based on state residence violates the CFTC's mandate for impartial access....