A coalition of 40 state attorneys general is pushing back against federal oversight of sports-related prediction markets, arguing the contracts function as wagers and should be regulated by states, not the Commodity Futures Trading Commission. In a letter filed this week, the attorneys general contend that products allowing users to bet on winners, spreads, totals, and player statistics are essentially sportsbook-style gambling, not commodities trading.
A battle over jurisdiction
The dispute centers on who gets to police prediction markets—online platforms where people place money on outcomes like whether a team will cover the spread or a player will score a certain number of points. The CFTC has considered whether to classify these contracts as event contracts under its authority, but the state officials say that approach sidesteps state gambling laws. They argue that the contracts are indistinguishable from traditional sports bets offered by licensed sportsbooks, which states have regulated for decades.
“These contracts are wagers, plain and simple,” the attorneys general wrote in their filing, which was not publicly attributed to any single official. The group, which includes both Republican and Democratic attorneys general, insists that letting the CFTC step in would undercut state consumer protections and create a patchwork of federal rules that could bypass state bans on sports betting.
What counts as a wager
The core of the argument is legal definition. Under the Commodity Exchange Act, the CFTC oversees futures and options, but state gambling regulators oversee bets on contingent events. The attorneys general say that when a prediction market offers a contract on a player’s exact rushing yards or the point spread of an NFL game, it’s not a financial instrument—it’s a gamble. They point out that many of these markets mirror the same offerings at regulated sportsbooks, just without the state-level licensing, taxes, and age restrictions.
The move comes as prediction markets like Kalshi and Polymarket have grown in popularity, drawing attention from federal regulators and lawmakers. The CFTC has previously taken action against some platforms, but the agency has also considered proposing rules to allow certain event contracts. The states’ filing aims to block that path.
What happens next
The CFTC hasn’t yet responded publicly to the letter. The agency is still weighing whether to issue formal guidance or a rule on sports-related event contracts. If it moves forward, the attorneys general could challenge that action in court, arguing the agency overstepped its authority. For now, the letter puts pressure on the commission to either defer to the states or prepare for a legal fight over who decides what counts as a bet.
