A bipartisan coalition of 41 state attorneys general has called on the Commodity Futures Trading Commission (CFTC) to confirm that individual states—not federal regulators—have authority over sports-related “event contracts.” This request comes amid growing scrutiny of prediction market platforms operating across the US.
Prediction Platforms Compared to Unregulated Sportsbooks
In a formal submission, the coalition argued that platforms such as Polymarket and Kalshi are effectively functioning as unregulated sportsbooks. These platforms allow users to trade contracts tied to sports outcomes, including match winners, point spreads, and player performance metrics.
State officials contend that such activity resembles traditional gambling rather than legitimate financial hedging. Therefore, they argue it falls outside the intended scope of federal derivatives regulation.
States Assert Authority Over Gambling Regulation
The attorneys general emphasized that gambling regulation has historically been governed at the state level, with established legal precedent supporting this structure. Iowa Attorney General Brenna Bird stated that states already have functioning legislative and regulatory systems in place to oversee sports betting. These systems include licensing, taxation, and consumer protection measures.
The coalition also warned that some prediction market operators are attempting to bypass these frameworks by positioning their products as financial instruments rather than betting services.
Response to CFTC Consultation on Prediction Market Rules
The filing was submitted in response to the CFTC’s ongoing consultation regarding potential rules for prediction markets. The coalition is urging the agency to formally acknowledge that it does not have jurisdiction over sports-related event contracts. This would preserve the authority of states to regulate or prohibit such activities within their borders.
Concerns Over Public Health and Financial Risks
Beyond jurisdictional issues, the attorneys general raised concerns about the societal impact of expanding gambling-like products. The coalition pointed to risks related to problem gambling and financial harm. They argued that state regulators can better address these challenges through localized policies and enforcement
Nationwide Support Reflects Growing Regulatory Tension
Attorneys general from a wide range of US states joined the effort, reflecting broad bipartisan concern over the rapid growth of prediction market platforms. As these products continue to blur the line between finance and gambling, the CFTC’s decision could significantly influence how regulators oversee such platforms nationwide.
Ongoing Debate Over Future of Prediction Markets
The push from state officials highlights a larger regulatory debate in the US: whether authorities should treat prediction markets as financial instruments under federal oversight or as gambling products under state laws. The resolution of this issue will shape the future of event-based trading platforms and define their role within the broader betting and financial ecosystem.
