Venture capital firm Andreessen Horowitz has backed the Commodity Futures Trading Commission in a growing dispute with US states over prediction markets, warning that local crackdowns could limit access for everyday users.
In a letter responding to the CFTC’s proposed rules, the firm argued that actions by state regulators — including cease-and-desist orders and criminal cases — are creating barriers that conflict with federal law. These moves, it said, undermine the CFTC’s role in ensuring fair and open access to regulated markets.
The debate comes as several states, including Illinois, Arizona, Connecticut, New York and Wisconsin, have tried to restrict platforms such as Kalshi and Polymarket. The CFTC has pushed back, filing lawsuits and arguing that these markets fall under federal oversight.
Andreessen Horowitz supported that view, saying forcing platforms to block users based on where they live goes against the principle of equal market access and could reduce liquidity.
Who decides what counts as gambling?
State officials have argued that some prediction markets — especially those tied to sports or politics — amount to unlicensed gambling. Andreessen Horowitz disagreed, saying the CFTC has long had the authority to define what qualifies as “gaming” under US commodities law.
The firm also highlighted the broader value of prediction markets, saying they help people understand uncertain events by using prices to reflect crowd expectations. It added that blockchain-based platforms can improve transparency because transactions are recorded onchain.
Growing market, ongoing tensions
The letter comes as prediction markets continue to grow in popularity, with most users being retail traders rather than large institutions.
Meanwhile, Polymarket is reportedly in talks with the CFTC about returning to the US market. The platform has blocked American users since a 2022 settlement, when it paid a $1.4 million fine over unregistered contracts.
A full return would require approval from the commission, though that process could move more quickly as several CFTC seats remain unfilled.
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