politics · Tuesday, May 12, 2026 · 4 min
CFTC sued four states in 19 days to defend prediction markets: wait on IBKR at $84.59
The federal regulator filed its fourth court action in 19 days defending prediction markets from state interference. The cleanest public stock to benefit (Interactive Brokers, which owns its own prediction-market exchange) is already near its yearly high. Don't chase at $84.59, wait for a pullback to $80.
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Watch $80.00: First level we would actually buy. Roughly 5% below today's close and the area the stock last consolidated in mid-April.
Watch $76.00: Deeper pullback that would also retest the rising trend line; closer to the 50-day average at $73.35 but with a buffer.
Why this size: Zero size today. Stock is roughly 3% from its 52-week high ($87.37) with momentum at 66.8 on a 0 to 100 scale (elevated, cooling possible). The regulatory story is real but slow-moving (court rulings, not earnings) and the price has already moved. Wait for the pullback before committing capital.
When you'd hold this: 2 to 6 weeks, around Sixth Circuit ruling expected in next 60 to 90 days; no fixed date
The federal agency that polices the futures market filed its fourth court action in 19 days defending prediction markets from state regulators1. Today's filing was an amicus brief in the Sixth Circuit appeals court, after three earlier lawsuits and court filings against New York, Wisconsin, and Massachusetts in late April. The pattern matters: a federal regulator does not file four court briefs in three weeks unless it is settling who is in charge for the next decade. Interactive Brokers is the one big publicly-traded stock that quietly owns a federally-regulated prediction-market exchange (ForecastEx), but the stock is already near its yearly high. Wait for a pullback before buying.
What just happened
The Commodity Futures Trading Commission, the federal agency that regulates futures and event-contract markets, filed an amicus brief in a Sixth Circuit appeals court case today1. That is a fancy way of saying they walked into court and told the judges that contracts that pay out based on real-world events (an election, a sports outcome, the next inflation reading) fall under federal jurisdiction and states cannot ban them.
This is the fourth time in 19 days they have done this. On April 23 they sued New York. On April 24 they sued Wisconsin and filed a similar brief in the Massachusetts Supreme Judicial Court. Today they hit the Sixth Circuit. Four court actions, three weeks, same message: the federal regulator owns this market.
The stocks tied to this story moved a little today. Interactive Brokers, which owns its own federally-regulated prediction-market exchange called ForecastEx, was up 0.81% to $84.59. Robinhood, which has been pushing into event contracts and which we wrote about yesterday, was up 1.61% to $78.27.
So what
Follow the chain. State regulators do not want unregulated betting markets, so they have been issuing cease-and-desist letters to Kalshi and Polymarket. The federal regulator says the states do not get a vote because event contracts are federal. Federal courts are now picking sides, and so far the federal regulator is winning.
This means the legal moat around federally-regulated prediction-market venues keeps getting wider. It means smaller startups cannot just spin up a sports-betting market in a single state, because the federal regulator will defend its turf. It means the existing license holders (Kalshi, which is private; ForecastEx, owned by Interactive Brokers; the Robinhood event-contract platform) get a head start that is hard to catch up to. Which is why Interactive Brokers is the cleanest publicly-traded way to own a piece of this story, and it is also why the stock is already near its yearly high.
The Senate Banking committee chair filed his quarterly trading disclosure yesterday, May 112. Senate filings are public and worth watching when a regulatory story is unfolding; if a committee chair started buying or selling exchange operators while this fight was active, that would be a signal. (His May 11 filing did not contain a relevant trade, but the timing is worth flagging for the next filing window.)
What to do about it
Don't chase Interactive Brokers at $84.59. The stock is up roughly 70% from its yearly low and sits about 3% below its yearly high. Momentum is hot but cooling. The court case in the Sixth Circuit will not resolve in the next two weeks, so there is no urgency to be in today.
Wait for a pullback. If it trades down to around $80, that is the first place we would buy. Around $76 is the second. If it just keeps grinding higher without a pullback, we miss this one, and that is fine, the regulatory story takes months to play out and the stock will give a better entry along the way.
Main risk: a state wins one of these cases on appeal. The federal-versus-state fight could flip, and the moat we are pricing in disappears. Watch the Sixth Circuit docket.
What we got right (and wrong) before
Yesterday we called Robinhood a buy at $77.03 on a parallel federal-regulator-defends-prediction-markets story. It is at $78.27 today, up 1.6%. The thesis is intact and the position is open. We are not stacking a second prediction-market position on top of it; that is why this post is a wait, not a buy.
For the nerds
IBKR: $84.59, +0.81% on day, 52-week range $49.15 to $87.37. RSI 14 at 66.8 (elevated, cooling possible). MACD line 3.22 over signal 2.94, histogram +0.28 (bullish but narrowing). 50-day SMA $73.35, 200-day SMA $69.18, trend uptrend. Volume 4.4M shares.
CFTC press releases referenced: 9230-26 (today, Sixth Circuit), 9220-26 (April 24, Wisconsin), 9219-26 (April 24, Massachusetts SJC), 9218-26 (April 23, New York)1.
Polymarket activity for context: Trump-China-visit market $7.0M 24h volume, Bitcoin-150k market $5.8M 24h volume, Bowman-Fed-Chair market $2.5M 24h volume. These are institutional-scale order books on a venue the CFTC is now defending in four courts simultaneously.
Not financial advice. Do your own research.
What we passed on
- $DKNGPENDING-0.5% since pass
DraftKings is closer to the state-vs-federal fight on the wrong side; states regulate sports betting and the same state attorneys general now suing prediction markets are happy to keep DKNG paying their license fees. Not a beneficiary of this story.
- $HOODPENDING+20.5% since pass
We already called this one yesterday at $77.03. It is at $78.27 today, the thesis is intact, but we are not opening a second prediction-markets trade on top of an open one.