State attorneys general dispute CFTC's reach over sports event contracts
Regulation & Gov ·
A 44-state coalition of attorneys general has told the Commodity Futures Trading Commission it oversteps its mandate by treating sports-outcome contracts as regulated derivatives, and wants the agency's draft event-contracts rule redrawn.
The letter, signed by attorneys general from 44 states, argues that wagers structured around athletic outcomes fall outside the CFTC's jurisdiction and instead belong under state gaming law, according to The Block. The group is pressing the agency to revise its proposed rule on event contracts before it takes final form, rather than treat sports-linked products as a settled category of federally supervised swaps.
The dispute lands amid a broader tug-of-war over how prediction markets should be classified and who gets to police them. The CFTC's core authority spans futures, options, and swaps tied to commodities — a category broad enough to cover digital assets — and extends to overseeing exchanges, clearinghouses, and brokers that run that infrastructure, per the CFTC explainer. Sports and election-related event contracts sit at the edge of that remit, and the states' letter is the latest sign that the boundary is contested rather than settled.
It follows other recent friction over the same question: the Department of Justice and the CFTC have separately moved to block a state prosecution in Arizona targeting Kalshi, arguing that the company's sports and election contracts should be treated as federally regulated swaps rather than state-level gaming products. That stance is at odds with the states' position that sports contracts belong to state, not federal, oversight — underscoring how the jurisdictional fight is playing out in parallel through both litigation and rulemaking.
The CFTC's own leadership has signaled openness to prediction markets rather than resistance. CFTC Chair Michael Selig has said platforms such as Polymarket can outperform traditional polling and help counter misinformation, and has called for U.S. rules that support the sector's growth domestically rather than push it offshore. That posture sits uneasily against the states' argument that the agency is claiming authority it was never given over sports-specific contracts.
What remains unresolved is whether the CFTC will amend its proposed event-contracts rule in response to the coalition's letter, and how the parallel Arizona case involving Kalshi will shape the broader question of state versus federal control over sports-outcome markets. Neither the CFTC's formal response to the 44 attorneys general nor a resolution of the Kalshi litigation has been reported yet.