Prediction markets have wandered into the middle of a fresh constitutional fight.
Minnesota just passed the nation’s first outright ban, classing these markets as gambling and putting them under the state’s usual authority to police public morals and protect consumers.
Washington didn’t wait long to weigh in. The federal Commodity Futures Trading Commission promptly sued, insisting that prediction markets are federally regulated financial instruments and that national commodities law overrides any conflicting state rules under the supremacy clause.
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Put the technical language aside and you end up with a question the country has wrestled with for a long time. When a state bars something under its reserved powers, and a federal regulator says it’s allowed under national authority, which side gets the last word?
This is the foundation for a fascinating debate with clear constitutional guidance that is often overlooked. The federal government has settled into a dangerous habit: quote the part of the Constitution you like, skip the part that restrains you, and, if a conflict arises, assert Article 6 authority to declare federal rule “supreme.”
The supremacy clause in Article 6 of the U.S. Constitution has become Washington’s go-to cudgel. Agency regulators, Hill staff attorneys, and policy writers repeat the line with near-ritual certainty: federal law is supreme, states lose, case closed. Except that isn’t the Constitution. Not even close.
Here’s what the supremacy clause actually says: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof … shall be the supreme Law of the Land.” The work is done by a small phrase people keep stepping over, “made in Pursuance thereof.” Those words aren’t filler. They’re the brake. They’re the barrier against a national government that can expand simply by will and whim.
A federal rule doesn’t become supreme because Congress voted on it or because an agency printed it on letterhead. Supremacy attaches only when the law fits within constitutional authority, when it sits inside an enumerated power that the Constitution assigns to the national government. Outside that delegation of authority, the law isn’t “higher” than state law. It’s invalid.
Yet much of Washington now behaves as if any statute, regulation, memo, guidance, grant condition, or internal bureaucratic preference is supreme and negates state authority.
Federal agencies misrepresent the supremacy clause by declaring that state law “must yield” whenever federal aims are involved. The Department of Education has proclaimed in guidance and explanatory materials that “the supremacy clause mandates that federal laws are supreme.” The Department of Transportation asserts federal law “displace[s]” state law. The Department of Homeland Security says federal judgments “must prevail over those of the states.”
Even the Congressional Research Service — Congress’s research arm — often feeds this misunderstanding. A cursory review of CRS reports’ descriptions of the supremacy clause found nearly a dozen that misrepresent what the supremacy clause actually says. Those reports claim that “federal law supersedes conflicting state law” or that the supremacy clause alone allows Congress to change “the balance of federal and state authority” through preemption, and that, due to the supremacy clause, national regulations and agency actions are “elevated” over state law.
By ignoring the supremacy clause’s qualifier, the supremacy clause becomes an independent national power divorced from any specific constitutional power. This changes the very structure of American constitutional government.
Trillions flow through grants, subsidies, mandates, cooperative programs, and conditional funding schemes that press states into compliance while preserving a thin veneer of choice. States start to look less like governments with their own authority and more like regional branches carrying out national directives.
If every federal enactment automatically overrides state law regardless of constitutional limits, enumeration turns into decoration. Congress could draft its way into new authority whenever convenient, the very kind of indefinite power the founding generation said no to.
There’s a reason the supremacy clause starts with “This Constitution” before it turns to “Laws.” Statutes are supreme only when they are constitutional.
The full supremacy clause encapsulates the core of the Constitution. The federal government is supreme within its limited jurisdiction of delegated powers and those necessary and proper to fulfill those delegated powers. The states hold broad police powers, the day-to-day authority over most ordinary life: schooling, health rules, most criminal law, land and zoning, family law, local commerce, and public morality. The 10th Amendment didn’t invent that split, it restated it.
James Madison described national powers in Federalist 45 as “few and defined,” while state powers remained “numerous and indefinite.” Alexander Hamilton, no friend of a weak national government, said in Federalist 33 that acts not grounded in constitutional authority “will be merely acts of usurpation, and will deserve to be treated as such.”
Read the word choice for what it is: usurpation.
Courts have long recognized broad federal authority under decisions like McCulloch v. Maryland, but even broad authority still depends on constitutional delegation.
That’s what makes the prediction market case worth watching. Minnesota says these markets resemble gambling, so they belong within traditional state authority. Federal regulators respond that they are national financial instruments governed through Congress’s commerce power. Reasonable people can argue about where the line should land.
Yet another issue sits underneath the surface. The moment federal regulators enter an area, must they claim total preemptive control, immediately and completely? Or is there room, where the text allows it, for federal and state authority to exist side by side in overlapping ways?
The post-Chevron landscape makes that question harder to dodge. Courts are no longer expected to automatically defer to agencies’ readings of statutes. After Loper Bright, agencies might find judges asking something more pointed: not whether regulators assert authority, but whether Congress and the Constitution actually granted it.
The irony is that real federalism was never an enemy of national unity. The whole supremacy clause protects the national government’s enumerated powers from harmful intergovernmental fights while also preventing national domination and preserving broad local diversity.
States were not intended to serve as mere implementation agents. They were meant to be partners in the constitutional order, which includes serving as checks against authoritarianism and centralization.
Our Constitution protects liberty and democracy by dispersing power. With power dispersed, people have options. States can push back. Policies can compete. Local officials answer to local voters. Different approaches can exist side by side.
But once everything important is nationalized, every dispute becomes a winner-take-all brawl. Every election feels like a fight for total control.
We’re living with what that produces.
Washington weighs in on school lunches, showerheads, zoning incentives, health insurance, energy standards, hiring rules, farm runoff, and local policing priorities, and then claims constitutional supremacy over almost any conflict that follows.
The federal government hasn’t just grown. It has spread.
Yet the text hasn’t changed.
The supremacy clause still says what it said at the start: Federal laws prevail over state laws, but only when they are made “in Pursuance” of the Constitution.
Not outside it.
Not around it.
Not in spite of it.
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The founders aimed for a government strong enough to act nationally, yet limited enough to keep liberty alive locally. The modern selective reading of the supremacy clause quietly wipes out that line.
A government that treats constitutional limits as optional doesn’t stop there, it will end up treating liberty the same way.
Jason Thompson is a member of the Utah House of Representatives. Dr. Troy Smith is the director of the Constitutional Federalism Initiative at Utah Valley University.