For prediction market regulation, it's states versus the feds

Summary

Marketplace Morning Report – Episode Summary

Episode Title: For prediction market regulation, it's states versus the feds
Date: February 18, 2026
Host: David Brancaccio
Main Correspondents: Nancy Marshall Genzer, Kaylee Wells, Susan Schmidt

Episode Overview

This episode of Marketplace Morning Report provides a brisk but comprehensive look at several current business and economic news items. The main segment focuses on the intensifying dispute over who should regulate prediction markets in the U.S. – state governments or federal authorities. The episode also touches on leadership changes at Europe's central bank and explores whether Sweden might eventually switch to the euro amid turbulent geopolitical times.

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Key Discussion Points & Insights

1. Regulating Prediction Markets: States vs. Federal Government

• Summary:
  The U.S. faces a regulatory conflict over prediction markets (e.g., Kalshi, Polymarket, Crypto.com), with states like Nevada and Massachusetts challenging federal authority claimed by the Commodity Futures Trading Commission (CFTC).

• Discussion Highlights:

  • Federal Argument (CFTC):
    • The CFTC filed a legal brief concerning Crypto.com and Nevada, claiming these platforms offer derivative contracts, not mere gambling.
    • CFTC Chairman Michael Selig, in a Wall Street Journal op-ed, accused states of being "overzealous" and asserted congressional authority for the agency.
      • Notable Quote: "Congress gave his agency authority over these contracts and what he calls overzealous state governments trying to undermine the agency." (Nancy Marshall Genzer, 01:52)
  • State Perspective:
    • States argue that betting on outcomes such as Time Magazine’s Person of the Year or the next Spotify hit is gambling and must be regulated locally.
    • Nevada sued Kalshi for alleged violations of state gambling and underage betting laws; Massachusetts and Utah are also taking legal action.
    • Notable Quote: "They say that means platforms like crypto.com and polymarket should have to follow state laws on gambling." (Nancy Marshall Genzer, 02:48)
  • Prediction Companies' Preference:
    • Firms want federal oversight to avoid complex state-by-state rules.
    • Former CFTC officials worry the agency lacks resources and expertise for proper regulation.
    • Notable Quote: "Kalshee says it would be hard to deal with a patchwork of different state regulations." (Nancy Marshall Genzer, 03:18)

• Timestamps:

  • Segment start: [01:30]
  • Federal-state arguments: [01:52]–[03:35]

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2. Leadership Change at Europe’s Central Bank (ECB)

• Summary:
  The Financial Times reported ECB President Christine Lagarde will step down before her term ends, raising questions about succession and parallels with U.S. Federal Reserve leadership.

• Discussion Highlights:

  • Susan Schmidt (Exchange Capital Resources) notes Lagarde’s steady leadership post-COVID and during inflation surges.
  • David Brancaccio remarks that the succession process in Europe is more orderly compared to the contentious situation around U.S. Fed Chair Jay Powell.
  • Powell’s term as chair ends in May; he could remain on the board until 2028 unless he resigns, offering the current president the opportunity for a new appointment.
  • Notable Quote: "The big question now will be: does he stay on and continue to hold that seat or will he resign and give President Trump a chance to appoint someone else to fill that seat?" (Susan Schmidt, 04:28)

• Timestamps:

  • ECB news introduction: [03:35]
  • Jay Powell/Fed parallel: [04:15]–[04:28]

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3. Sweden Considers Joining the Euro

• Summary:
  Sweden, a non-euro EU member, is reconsidering its currency stance, influenced by economic and geopolitical volatility.

• Discussion Highlights:

  • Economist Lars Calmfors, once an opponent, now sees substantial economic benefits to adopting the euro, like increased trade and investment for Sweden’s multinational enterprises (e.g., Volvo, Ikea).
  • Senior Fellow Anders Öchlund emphasizes the practical business advantages of a common currency, but notes the political and cultural significance of maintaining krona.
  • Recent geopolitical instability (Russian invasion of Ukraine, U.S. unpredictability) drives a sense of vulnerability among small economies like Sweden.
  • Georgetown professor Kathleen McNamara suggests this climate could make Sweden and possibly Denmark more likely to join the eurozone for security and solidarity reasons.
    • Notable Quote: "The geopolitics of our time are such that Sweden needs to feel safe and united with the rest of Europe." (Kathleen McNamara, 08:55)
    • Notable Quote: "Very possible that people start to doubt the economic stability and sustainability of the American economy. And so people may flee the dollar." (Kathleen McNamara, 09:21)

• Timestamps:

  • Sweden–Euro debate introduction: [07:06]
  • Economic rationale: [07:54]–[08:19]
  • Geopolitical context: [08:41]–[09:34]

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Notable Quotes & Memorable Moments

• Nancy Marshall Genzer [01:52]:
  “Congress gave his agency authority over these contracts and what he calls overzealous state governments trying to undermine the agency.”
• Nancy Marshall Genzer [02:48]:
  “They say that means platforms like crypto.com and polymarket should have to follow state laws on gambling."
• David Brancaccio & Susan Schmidt [04:28]:
  “The big question now will be: does he [Jay Powell] stay on and continue to hold that seat or will he resign and give President Trump a chance to appoint someone else to fill that seat?”
• Larche Kalmforch [07:36]:
  “We stressed very much the dangers of joining the monetary union when we were not ready for it.”
• Larche Kalmforch [08:15]:
  “If you have a small economy, you won’t have a stable exchange rate.”
• Kathleen McNamara [08:55]:
  “The geopolitics of our time are such that Sweden needs to feel safe and united with the rest of Europe.”
• Kathleen McNamara [09:21]:
  “Very possible that people start to doubt the economic stability and sustainability of the American economy. And so people may flee the dollar.”

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Timestamps for Critical Segments

• [01:30] — Prediction markets regulation debate introduction
• [03:35] — ECB leadership change & U.S. Fed comparison segment
• [07:06] — Sweden weighing Eurozone adoption
• [08:41] — Geopolitical forces on currency strategies

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Tone & Style

The episode maintains Marketplace’s signature brisk, informative, and slightly conversational tone, mixing hard economic analysis with accessible explanations and a dash of dry humor.

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Summary

This Marketplace Morning Report episode provides a concise yet insightful look at major business and economic developments: the battle over who regulates prediction markets (highlighting federal-state tensions), uncertainty at major central banks in the U.S. and Europe, and a detailed look at why Sweden may soon embrace the euro in response to global instability. Expert commentary offers accessible explanations for complex issues, making the episode valuable even to listeners new to the subject.

Transcript

[Morgan Stanley Announcer]

This episode is sponsored by Morgan Stanley's Thoughts on the Market. Today's financial markets move fast. Morgan Stanley moves faster with their daily podcast, Thoughts on the Market. Thoughts on the Market covers daily trends across the global investment landscape with actionable insights from Morgan Stanley's leading economists and strategists. And with most episodes under five minutes long, staying informed has never been easier. Listen and subscribe to Thoughts on the Market wherever you get your podcasts.

[Mackenzie]

My name is Mackenzie and I started a GoFundMe for the adoptive mother of a nonverbal autistic child. The mother had lost her job because she wasn't able to find adequate care for this autistic child. So she really needed some help with living expenses, paying some back bills. So I launched a GoFundMe to help support them during this crisis and we raised about $10,000 within just a couple of months. I think that the surprising thing was by telling a clear story and just like really being very clear about what we needed, we had some really generous donations from people who were really moved by the situation that this family was struggling with.

[GoFundMe Announcer]

GoFundMe is the world's number one fundraising platform, trusted by over 200 million people. Start your GoFundMe today at gofundme.com that's gofundme.com gofundme this podcast is supported by GoFundMe.

[David Brancaccio]

These new prediction markets get some federal attention. I'm David Brancaccio in Los Angeles. A major fight is brewing over who has the right to regulate prediction markets like Calci and Poly Market. This is a new flavor of betting. The Trump administration asserts it is not states, but the feds in charge. Let's bring in Marketplace's Nancy Marshall Genzer.

[Nancy Marshall Genzer]

Well, David, the Commodity Futures Trading Commission has filed a brief in a case involving Crypto.com, and the Nevada Gaming Control Board. Now, Crypto.com allows users to bet on things like the super bowl and even economic indicators. The agency says it should regulate prediction markets because they're a type of derivative contract that allows traders to speculate on various outcomes. In an op ed in the Wall Street Journal, the CFTC Chairman Michael Selig says Congress gave his agency authority over these contracts and what he calls overzealous state governments trying to undermine the agency.

[David Brancaccio]

Okay, but states have their argument. They say buying a share in I don't know whether Time magazine's Person of the Year will be Artificial Intelligence or if the most streamed song on Spotify next Tuesday will be Bad Bunnies. Titi me pregunto is gambling.

[Nancy Marshall Genzer]

Yeah, that's right. And they say that means platforms like crypto.com and polymarket should have to follow state laws on gambling. Nevada filed a lawsuit against Kalshi yesterday and it says Kalshi follow state laws on underage betting. Massachusetts has also sued Kalshee and Utah has joined court briefs against the company. Gambling is illegal in Utah and the.

[David Brancaccio]

Prediction companies don't want states regulating right.

[Nancy Marshall Genzer]

On its website, Kalshee says it would be hard to deal with a patchwork of different state regulations. It wants one federal regulator, the Commodity Futures Trading Commission, but some former CFTC officials say the agency doesn't have the expertise or staff needed to regulate prediction markets.

[David Brancaccio]

Nancy, thank you. The Financial Times just reported that the head of Europe's central bank will leave early sometime before her term expires. Christine Lagarde has been at the helm there since just before COVID Times. The FT cites an unnamed source familiar with Lagarde's thinking. Susan Schmidt is at Exchange Capital Resources. Good morning.

[Susan Schmidt]

Good morning.

[David Brancaccio]

The Financial Times doesn't say just when Christine Lagarde might be out at the ecb, but it's interesting development.

[Susan Schmidt]

It is interesting. She's been a steady hand at the helm of the ECB post Covid and really guiding Europe through tough inflationary times, just as we've had in the US.

[David Brancaccio]

Apparently succession is a little more orderly than the process in the United States, where the President has been very vocal about wanting our central banker out. Jay Powell's term ends this year. I think it's May.

[Susan Schmidt]

He is done as chair in May and so he will no longer be presiding over the board. But remember that he can stay on is the fed board until 2028. And so the big question now will be does he stay on and continue to hold that seat or will he resign and give President Trump a chance to appoint someone else to fill that seat?

[Morgan Stanley Announcer]

This episode is sponsored by Morgan Stanley's Thoughts on the Market. It can be difficult to stay up to date on the financial market in today's ever changing environment. With so much commentary at any given moment, it's hard to cut through the noise to gain quality, actionable insights. Morgan Stanley is here to help with their podcast Thoughts on the Market. Thoughts on the Market is your daily market snapshot covering trends across the global investment landscape and offering perspectives from Morgan Stanley's leading economists and strategists. It's one of the only daily podcasts providing real time commentary from a financial institution on the day's biggest questions and topics and with Most episodes under 5 minutes long, market clarity can fit seamlessly into your daily routine. Staying informed has never been easier. Listen and subscribe to thoughts on the market on Spotify, Apple, Apple Podcasts, YouTube, or wherever you get your podcasts.

[Mackenzie]

My name is Mackenzie and I started a GoFundMe for the adoptive mother of a nonverbal autistic child. The mother had lost her job because she wasn't able to find adequate care for this autistic child, so she really needed some help with living expenses, paying some back bills. So I launched a GoFundMe to help support them during this crisis and we raised about $10,000 within just a couple of months. I think that the surprising thing was by telling a clear story and just like really being very clear about what we needed, we had some really generous donations from people who are really moved to by the situation that this family was struggling with.

[GoFundMe Announcer]

GoFundMe is the world's number one fundraising platform, trusted by over 200 million people. Start your GoFundMe today at gofundme.com that's gofundme.com, gofundme.com this podcast is supported by GoFundMe.

[David Brancaccio]

Most countries in the European Union use the euro as their currency, but a few countries have chosen to keep their own Bulgaria, Czech Republic, Denmark, Hungary, Poland, Romania and Sweden. But that last one is considering ditching its krona for the euro marketplace's Kaylee Wells explains.

[Kaylee Wells]

Before Sweden voted on the euro, Larche Kalmforch argued adopting it wasn't a good idea. He chaired the government commission that analyzed whether Sweden should adopt the common currency. Today he's an economics professor at Stockholm University.

[Larche Kalmforch]

We stressed very much the dangers of joining the monetary union when we were not ready for it.

[Kaylee Wells]

Sweden was coming out of a financial crisis it wanted to solve on its own, and the majority of Swedish voters agreed. But a lot has changed since then, including Kalmforce's opinion.

[Larche Kalmforch]

The economic benefits in terms of stimulating trade, foreign direct investment, they seem to be much greater than before because Sweden.

[Kaylee Wells]

Is a small country about the size of Los Angeles county, but it's got a lot of big companies that do lots of business abroad. Maybe you've heard of them. Volvo H and Ikea.

[Larche Kalmforch]

If you have a small economy, you won't have a stable exchange rate.

[Kaylee Wells]

Anders Ochlund is a senior fellow at the foreign policy think tank Stockholm Free World Forum. He says international business is a lot easier when it doesn't rely on a bunch of different currencies. But currency isn't just an economic tool, it's a political one, too.

[Larche Kalmforch]

Sweden is the odd man out. Sweden was proud of being it. Now we are afraid.

[Kaylee Wells]

Consider the last five years. Russia invaded Ukraine. The US Started talking about taking Greenland from Denmark, plus all the tariffs. So we've got big countries with big economies threatening small countries with small economies.

[Kathleen McNamara]

The geopolitics of our time are such that Sweden needs to feel safe and united with the rest of Europe.

[Kaylee Wells]

Kathleen McNamara teaches government at Georgetown University. She says amid all this uncertainty, smaller states are feeling pressured to pick sides for protection. Sweden might pick Europe because, yes, the US Dollar has historically been the port in international economic storms, but today it's.

[Kathleen McNamara]

Very possible that people start to doubt the economic stability and sustainability of the American economy. And so people may flee the dollar.

[Kaylee Wells]

Which creates an opening for Europeans and their euro to become political and economic leaders. McNamara says she's waiting to see not just if Sweden adopts the euro, but if Denmark will follow suit. I'm Kaylie Wells for Marketplace.

[David Brancaccio]

When Kaylee mentioned Sweden and Los Angeles county are similar in size, that's by population, each with around 10 million people, give or take. In terms of square mileage, Sweden is 16 times larger than LA County. In fact, Los Angeles. I'm David Brancaccia of Marketplace Morning Report. From APM American Public Media.

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