State Attorneys General Challenge CFTC Authority Over Sports Prediction Markets
A bipartisan alliance of attorneys general from 44 states has formally challenged the Commodity Futures Trading Commission’s (CFTC) efforts to oversee sports-linked prediction markets, asserting that the agency possesses no legal power to do so. In a detailed comment letter submitted as the public feedback window on the CFTC’s proposed rules closed, the group maintained that federal regulators are overstepping their statutory bounds and encroaching on longstanding state authority over gambling activities.
The correspondence, coordinated by Ohio Attorney General Andy Wilson along with counterparts from Kentucky, Maryland, Nevada, New Jersey, New York, Tennessee, and Utah, contends that the agency’s draft regulations far exceed the limits set by the Commodity Exchange Act.
Officials argue the proposal conflicts with constitutional principles, including federalism doctrines and the major-questions doctrine, and would prove arbitrary if finalized in its current form.
They urge the CFTC to abandon the existing approach and craft an entirely new framework that explicitly places sports-related event contracts under state law rather than federal derivatives oversight.At the heart of the dispute lies a fundamental disagreement over the nature of these products.
Prediction platforms allow users to trade contracts tied to game results, point spreads, player performances, and similar outcomes.
State leaders insist these instruments function identically to conventional sports wagers offered by licensed sportsbooks.
Because states have regulated gambling—including sports betting—for generations, while the federal government has not traditionally done so, the attorneys general say jurisdiction properly remains with them.
They emphasize that state systems already include licensing requirements, consumer safeguards, age restrictions, problem-gambling protections, and tax mechanisms that prediction markets currently sidestep.
The CFTC and the platforms it oversees take the opposite view.
They classify event contracts as swaps, a category of derivatives that Congress placed under the commission’s exclusive authority through t0he Commodity Exchange Act and subsequent reforms.
The agency has actively defended this position by filing lawsuits against multiple states that have sought to enforce local gaming laws against the exchanges.
Those legal battles continue in courts across the country, producing mixed early results and heightening the stakes of the current rulemaking.
The states’ letter arrives amid explosive growth in prediction-market activity, much of it driven by sports offerings.
Volumes have surged as platforms expanded their catalogs of event contracts, prompting both regulatory scrutiny and pushback from traditional sports leagues concerned about game integrity and consumer protection.
By insisting that sports bets cannot be listed on designated contract markets, the coalition seeks to preserve state control and prevent what it describes as a sweeping federal expansion into an area of major economic and social consequence.
Five states—Florida, Georgia, New Hampshire, Missouri, and Texas—declined to join the filing.
Nevertheless, the broad participation underscores widespread state-level resistance to federal preemption claims. The attorneys general conclude that any viable rule must respect the historical division of authority and leave regulation of sports gambling where it has always belonged: with the states.s doctrine implications.
