A16z said that cease-and-desist orders and proposed bans issued by state regulators against prediction market platforms create a "serious barrier to impartial access."
Prediction Market News
Venture capital firm Andreessen Horowitz has formally supported the Commodity Futures Trading Commission (CFTC) in its legal dispute with state regulators over predictionmarkets. The firm submitted an 18-page comment letter to the CFTC on May 2. It argued that state-level restrictions are blocking equal access to these markets for users across the US.
A16z said that cease-and-desist orders and proposed bans issued by state regulators against prediction market platforms create a "serious barrier to impartial access." The firm argued that requiring exchanges to block users based on their state of residence conflicts with CFTC rules on fair market access. It warned that restricting user access on this basis would reduce available liquidity.
"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," the firm wrote.
The CFTC has filed lawsuits against Illinois, Arizona, Connecticut, New York, and Wisconsin over the past month. The commission argues that those states are acting outside their jurisdiction by trying to regulate markets under federal oversight. CFTC Chairman Brian Selig has stated that event contracts on prediction market platforms qualify as swaps, placing them under the commission's exclusive jurisdiction.
State Regulators Push Back on Federal Authority
State regulators and attorneys general have contested the CFTC's position. They argue that platforms such as Kalshi and Polymarket are offering unlicensed gambling products. That characterization remains a central point of dispute as the legal battles move through the courts.
A16z argued in its letter that blockchain-based prediction markets carry a transparency advantage over traditional platforms. It pointed to the auditability of on-chain transactions as a feature that makes monitoring easier for both participants and regulators. The firm also described prediction market pricing systems as a "unique form of price discovery" that surfaces probabilities for uncertain future events.
Polymarket and Kalshi recorded combined lifetime trading volumes above $150 billion in April. That figure followed several months of accelerating activity on both platforms. A16z's letter positions the firm as an institutional voice for federal jurisdiction at a moment when the regulatory framework governing eventcontracts remains unsettled.
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