Forty-four state attorneys general urged the CFTC to withdraw its sports prediction market proposal, arguing it exceeds federal authority State officials argued gambling oversight belongs to
A coalition of attorneys general from 44 U.S. states has urged the Commodity Futures Trading Commission to withdraw its proposed rule on sports prediction markets. The officials argue that the agency has exceeded the authority granted under federal law by attempting to regulate sports-related event contracts. Their coordinated challenge adds another layer to an expanding legal battle involving federal regulators, state governments, and prediction market platforms.
Ohio Attorney General Andy Wilson led the letter, which was submitted on Monday as the CFTC’s public comment period concluded. According to the letter, the proposal stretches the agency’s authority beyond the limits established by the Commodity Exchange Act. Consequently, the attorneys general urged the CFTC to replace the proposal with rules that remain consistent with federal law and constitutional principles.
The letter argued that the proposed framework would dramatically expand federal authority into an area that states have traditionally regulated. Moreover, the attorneys general maintained that sports wagering has long remained under state oversight rather than federal supervision.
They also warned that the proposal could weaken established state regulatory systems governing sports betting. Additionally, they argued that allowing the CFTC to oversee these markets would create unnecessary conflicts between federal and state authorities.
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The attorneys general challenged the CFTC’s position that sports-related event contracts fall under its exclusive jurisdiction as federally regulated derivatives. Instead, they argued that Congress has never granted the agency authority over sports gambling markets.
According to the letter, states have regulated gambling activities for decades without direct federal oversight. Therefore, the officials contended that the proposed rule represents a significant shift in regulatory authority that lacks statutory support.
Besides opposition from state officials, the proposal has also drawn criticism from the sports industry. According to a July 27 letter obtained by The Closing Line, the National Football League urged CFTC Chair Michael Selig to strengthen restrictions on sports prediction markets. The league argued that the proposed framework does not provide sufficient safeguards for consumers or the integrity of professional sports.
Meanwhile, court rulings across several states have produced conflicting outcomes for prediction market operators. On Monday, a federal judge blocked Minnesota from enforcing its new prohibition on sports prediction markets while litigation continues. As a result, Kalshi and Polymarket may keep operating in the state until the case reaches a final decision.
However, another federal judge in New York again declined to prevent the state from enforcing its gambling laws against Kalshi. Therefore, the company remains subject to New York’s restrictions despite its ongoing legal challenge.
Last month, a Michigan judge issued a temporary restraining order preventing Kalshi from offering sports-related event contracts within the state. Likewise, a Washington court recently granted a temporary order blocking the platform after determining that its products likely violate state gambling laws.
The growing number of lawsuits and opposing court decisions underscores the uncertainty surrounding sports prediction markets in the United States. While the CFTC maintains that certain event contracts qualify as federally regulated derivatives, states continue defending their longstanding authority over sports wagering. The latest challenge from 44 attorneys general places additional pressure on the agency as it weighs the future of its proposed rule and its broader role in regulating prediction markets.
The coordinated opposition from 44 state attorneys general marks one of the strongest challenges yet to the CFTC’s proposed sports prediction market rule. Meanwhile, ongoing litigation across multiple states is expected to play a central role in determining whether federal regulators or state governments will ultimately oversee this rapidly evolving market.
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