A16z enters CFTC battle over state prediction market bans

Andreessen Horowitz has entered the growing fight over U.S. prediction markets. 

The venture capital firm is backing the Commodity Futures Trading Commission against state efforts to restrict platforms such as Kalshi and Polymarket.

The dispute centers on who should regulate event contracts. States argue that some contracts look like gambling. The CFTC and a16z argue that federally regulated markets should not face separate bans in each state.

a16z submitted a letter to the CFTC in response to the agency’s rulemaking process on prediction markets. The firm said state crackdowns, including cease-and-desist letters and legal threats, could block users from markets overseen by the federal regulator.

The firm argued that exchanges may lose liquidity if they must block users by state. It wrote, “Being forced to deny impartial access” would likely reduce available liquidity in affected markets.

CFTC clashes with several states

The CFTC has filed lawsuits against several states, including Illinois, Arizona, Connecticut, New York, and Wisconsin. The agency claims those states are trying to regulate markets that fall under federal oversight.

State officials have pushed back. They say platforms that offer contracts tied to sports, elections, and other events may operate like gambling businesses. a16z rejected that view and said the CFTC should decide how “gaming” applies under commodities law.

Meanwhile, the fight comes as Congress is also taking action on political event trading. The U.S. Senate voted unanimously to bar senators and staff from trading on prediction markets, including platforms such as Kalshi and Polymarket.

Kalshi said it already blocks members of Congress from using its platform. The company called the Senate vote “a great step to increase trust in markets.” The ban reflects concern that lawmakers and staff could have access to information that other traders do not.

Prediction markets become a wider media story

a16z has also moved deeper into prediction-market culture through media. The firm has backed “Monitoring the Situation,” a 24/7 livestream on X linked to Polymarket culture and real-time online news.

That media push shows how prediction markets now sit at the center of a wider debate. The platforms do not only host trades on future events. They also shape how users watch politics, sports, crypto, and breaking news.