The Trump administration has initiated legal action against the states of California, New York, and Illinois over their efforts to regulate internet-based prediction markets. Filed in 2026, the lawsuits challenge state-authorized laws and regulations that seek to limit or impose restrictions on these platforms, which allow users to place bets on the outcomes of political events, elections, and other real-world scenarios. The federal government argues that these state regulations are preempted by federal law, asserting jurisdiction over the operation of such prediction markets online. This legal confrontation highlights the ongoing conflict between state-level regulatory initiatives and federal authority in the realm of online gambling and betting markets. States involved have passed measures aimed at controlling the emergence and operation of prediction platforms within their borders, reflecting concerns over the implications of political betting and unregulated markets. The lawsuits mark a significant development in the regulatory landscape of internet prediction markets, underscoring the tensions around governance and oversight in this growing sector.