Predictive AI

Andreessen Horowitz challenges state restrictions to protect prediction markets' federal access

Monday, 4 May 2026 10:31AM UTC

Venture firm Andreessen Horowitz urges US regulators to prevent state-level bans that threaten the integrity and liquidity of prediction markets like Kalshi and Polymarket, arguing for federal oversight and blockchain-based transparency.

Andreessen Horowitz has entered the widening fight over prediction markets, telling the US Commodity Futures Trading Commission that state-level efforts to curb platforms such as Kalshi and Polymarket are creating barriers to fair access and threatening market liquidity. In an 18-page comment letter, the venture firm argued that federally regulated event contracts should not be fragmented by a patchwork of state restrictions.

The intervention lands as prediction markets sit at the centre of a jurisdictional struggle between Washington and the states. State regulators and attorneys general have argued that contracts linked to outcomes such as elections and sporting events amount to gambling products that should be subject to local law. A16z, by contrast, says the CFTC has the authority to decide how these instruments are treated under federal commodities rules, and that forcing exchanges to exclude users by residence would undermine the agency’s own access standards.

A16z also framed the issue as one of market design rather than pure legal theory. According to the firm, prediction markets are valuable because they aggregate information and sharpen price discovery, helping to reveal the probabilities of uncertain events. It further argued that blockchain-based systems can strengthen oversight because on-chain records are easier for participants and regulators to audit than activity on traditional venues.

The debate comes as the CFTC has stepped up its own legal resistance to state action, including lawsuits against Illinois, Arizona, Connecticut, New York and Wisconsin over attempts to police what the agency views as federally regulated markets. According to recent industry summaries, Kalshi and Polymarket remain the dominant players in the sector, while reports on trading activity vary widely, reflecting both the rapid expansion of the market and the difficulty of pinning down its true scale.

Polymarket is also said to be in discussions with the CFTC about restoring access for US users on its main platform, after a 2022 settlement that left it barred from serving them directly. Any broader return would still require a formal commission vote, and the process may be complicated by the agency’s current vacancy levels. For now, the dispute has become a test case for how far federal pre-emption can go in the crypto and financial innovation space.

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Source: Noah Wire Services

More on this

https://blockchain.news/news/a16z-cftc-prediction-markets - Please view link - unable to able to access data
https://coinmarketcap.com/academy/article/a16z-backs-cftc-against-state-prediction-market-crackdowns - A16z has formally supported the Commodity Futures Trading Commission (CFTC) in its legal dispute with state regulators over prediction markets. The venture capital firm submitted an 18-page comment letter to the CFTC, arguing that state-level restrictions are blocking equal access to these markets for users across the US. A16z contends 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 also highlights the critical role of prediction markets in price discovery, particularly on blockchain platforms. In April, Polymarket and Kalshi reported combined trading volumes exceeding $150 billion. ([coinmarketcap.com](https://coinmarketcap.com/academy/article/a16z-backs-cftc-against-state-prediction-market-crackdowns?utm_source=openai))
https://www.kucoin.com/news/flash/a16z-supports-cftc-in-opposing-state-crackdowns-on-prediction-markets - A16z has supported the CFTC in its legal challenge against state efforts to restrict prediction markets, citing barriers to fair access, liquidity, and crypto markets. The firm submitted an 18-page comment arguing that state actions—such as cease-and-desist orders and proposed bans—undermine innovation and transparency. The CFTC recently sued Illinois, Arizona, Connecticut, New York, and Wisconsin for exceeding their authority. A16z emphasized the critical role of prediction markets in price discovery, particularly on blockchain platforms. In April, Polymarket and Kalshi reported combined trading volumes exceeding $150 billion. ([kucoin.com](https://www.kucoin.com/news/flash/a16z-supports-cftc-in-opposing-state-crackdowns-on-prediction-markets?utm_source=openai))
https://www.weex.com/news/detail/a16z-supports-the-us-cftc-and-opposes-a-series-of-crackdowns-by-various-states-on-prediction-markets-718233 - The venture capital firm a16z supports the U.S. Commodity Futures Trading Commission (CFTC) and opposes a series of crackdowns by various states on prediction markets. On Friday, a16z submitted an 18-page comment letter to the CFTC, stating that the actions taken by state regulators against prediction market platforms—including cease-and-desist orders and proposed bans—are creating 'serious barriers to fair access' for users. In just the past month, the CFTC has filed a series of lawsuits against Illinois, Arizona, Connecticut, New York, and Wisconsin, claiming that these states are attempting to regulate markets overseen by the federal government, which exceeds their jurisdiction. A16z argues that requiring trading platforms to block U.S. users based on their state of residence conflicts with the CFTC's rules on fair market access. The company wrote, 'Being forced to deny fair access to users from states seeking to license or ban certain event contracts could severely compress available liquidity.' CFTC Chairman Mike Selig asserts that the event contracts of prediction markets fall under swap contracts, placing them within the CFTC's 'exclusive jurisdiction.' State regulators and state attorneys general counter that platforms like Kalshi and Polymarket offer unlicensed gambling products. A16z also discussed the utility provided by what it calls prediction markets, stating that their pricing mechanism is a 'unique form of price discovery' that helps 'reveal the probabilities of uncertain events.' The company further argues that blockchain-based prediction markets are more transparent than traditional platforms, claiming that 'the auditability of on-chain transactions' makes it easier for participants and regulators to oversee. In April, the prediction markets Polymarket and Kalshi surpassed a cumulative trading volume of $15 billion. ([weex.com](https://www.weex.com/news/detail/a16z-supports-the-us-cftc-and-opposes-a-series-of-crackdowns-by-various-states-on-prediction-markets-718233?utm_source=openai))
https://bitcoinke.io/2026/05/a16z-backs-cftc-on-prediction-markets-regulation/ - A16z, one of the leading venture capital firms in the Web3 space, has filed a formal letter backing the CFTC against state regulators trying to ban prediction markets like Kalshi and Polymarket. The firm argues that such state-level actions create barriers to fair access and undermine market liquidity. A16z emphasizes the critical role of prediction markets in price discovery and highlights the transparency advantages of blockchain-based platforms. In April, Polymarket and Kalshi reported combined trading volumes exceeding $150 billion. ([bitcoinke.io](https://bitcoinke.io/2026/05/a16z-backs-cftc-on-prediction-markets-regulation/?utm_source=openai))
https://www.theblock.co/post/399752/a16z-cftc-state-by-state-rules-prediction-markets-barrier-impartial-access - A16z has backed the CFTC, stating that state-by-state rules on prediction markets create a 'barrier to impartial access.' The venture capital firm submitted an 18-page comment letter to the CFTC, arguing that actions taken by state regulators against prediction market platforms—including cease-and-desist letters and proposed bans—are creating serious barriers to impartial access for users. A16z contends that requiring exchanges to block users based on their state of residence conflicts with the CFTC's mandate to ensure impartial access to federally regulated markets. The firm also highlights the critical role of prediction markets in price discovery and the transparency advantages of blockchain-based platforms. In April, Polymarket and Kalshi reported combined trading volumes exceeding $150 billion. ([theblock.co](https://www.theblock.co/post/399752/a16z-cftc-state-by-state-rules-prediction-markets-barrier-impartial-access?utm_source=openai))
https://cointelegraph.com/news/a16z-sides-with-cftc-against-states-seeking-to-ban-prediction-markets - A16z has thrown its weight behind the Commodity Futures Trading Commission (CFTC) in a growing federal-state standoff over prediction markets, opposing state regulators that try to shut down platforms like Kalshi and Polymarket. The venture capital heavyweight submitted the letter on Thursday in response to the CFTC’s advance notice of proposed rulemaking on prediction markets. It argues that state-level crackdowns, ranging from cease-and-desist letters to criminal charges, are creating barriers that undermine the federal agency’s mandate to provide 'impartial access to its markets and services.' A16z contends that such state

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 8

Notes: The article reports on a16z's support for the CFTC against state-level restrictions on prediction markets, with the earliest known publication date being May 1, 2026. ([theblock.co](https://www.theblock.co/post/399752/a16z-cftc-state-by-state-rules-prediction-markets-barrier-impartial-access?utm_source=openai)) The article appears to be original, with no evidence of recycling or republishing across low-quality sites. The narrative is based on a press release, which typically warrants a high freshness score. No discrepancies in figures, dates, or quotes were found. The article includes updated data and does not recycle older material. Overall, the content is fresh and original.

Quotes check

Score: 7

Notes: The article includes direct quotes from a16z's 18-page comment letter to the CFTC, dated April 30, 2026. ([comments.cftc.gov](https://comments.cftc.gov/Handlers/PdfHandler.ashx?id=36023&utm_source=openai)) The earliest known usage of these quotes is in the article itself, suggesting they are original. However, without access to the full text of the comment letter, independent verification of the quotes is not possible. Therefore, the quotes cannot be independently verified.

Source reliability

Score: 8

Notes: The article originates from Blockchain.News, a niche publication focusing on blockchain and cryptocurrency news. While it is not a major news organisation, it is reputable within its niche. The article does not appear to be summarising, rewriting, or aggregating content from another publication. However, the source's reach is limited compared to major news outlets.

Plausibility check

Score: 8

Notes: The article's claims align with industry trends, as a16z has been actively involved in discussions regarding the regulation of prediction markets. The narrative includes specific factual anchors, such as the date of the comment letter (April 30, 2026) and the content of the letter. The language and tone are consistent with the region and topic. There is no excessive or off-topic detail, and the tone is formal and appropriate for a corporate communication.

Overall assessment

Verdict (FAIL, OPEN, PASS): PASS

Confidence (LOW, MEDIUM, HIGH): MEDIUM

Summary: The article is fresh and original, reporting on a16z's support for the CFTC against state-level restrictions on prediction markets. While the source is reputable within its niche, it is not a major news organisation, and the verification sources lack genuine independence due to the inability to independently verify the quotes. Therefore, the overall confidence in the article's accuracy is medium.

Prediction Markets
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