The Commodity Futures Trading Commission is suing Illinois, Arizona and Connecticut — escalating its effort to assert what it calls its “exclusive jurisdiction” over prediction markets after Illinois moved to shut down several betting platforms.

On Thursday in the U.S. District Court for the Northern District of Illinois, the CFTC accused the state, Illinois Attorney General Kwame Raoul, and its gaming officials of trying to shut down "federally regulated DCMs," an acronym for designated contract markets.

The federal agency said that the state had sent cease-and-desist letters over the past year to Kalshi, Crypto.com, and Polymarket — all of which the complaint says fall under CFTC oversight.

"Illinois’s attempt to shut down federally regulated DCMs intrudes on the exclusive federal scheme Congress designed to oversee national swaps markets," the agency said in the complaint. 

Later on Thursday, the agency said it was also suing Arizona and Connecticut. 

“The CFTC will continue to safeguard its exclusive regulatory authority over these markets and defend market participants against overzealous state regulators,” said CFTC Chair Michael Selig in the statement. “This is not the first time states have tried to impose inconsistent and contrary obligations on market participants, but Congress specifically rejected such a fragmented patchwork of state regulations because it resulted in poorer consumer protection and increased risk of fraud and manipulation.”

Over the past several weeks,  Selig has steadily asserted his agency's jurisdiction over prediction markets, accusing states of engaging in lawsuits as a "power grab" and warning that the agency would "no longer sit idly by." 

Thursday's action, however, marks the first time the CFTC has explicitly sued a state over the jurisdiction of prediction markets. In February, the agency filed a court brief, supporting Crypto.com's prediction-market arm in a case it had against Nevada. 

The complaint against Illinois follows a similar argument the agency has taken, where it says that Congress granted the CFTC  "exclusive jurisdiction" over these derivatives under the Commodity Exchange Act.

States have started to bring litigation and say the platforms are violating local gaming and gambling laws, particularly related to sports-related bets.

The CFTC is asking for the court to find that the state violated the Supremacy Clause — a section in the U.S. Constitution that establishes that federal law takes priority over state law when it comes into question. The agency also asked the court to issue a permanent injunction to block the state and its future officials from "enforcing the challenged provisions" against CFTC DCMs. 

Pritzker's office, Raoul's office and the Illinois Gaming Board did not immediately respond to a request for comment. 

Updated at 5 p.m. UTC to include a press release from the CFTC on it suing three states