A bipartisan coalition of 41 state attorneys general is calling on the Commodity Futures Trading Commission (CFTC) to affirm that states, rather than federal authorities, hold the power to regulate sports-related event contracts.
This group has submitted an official comment to the CFTC, asserting that new prediction market platforms are operating as unregulated sportsbooks. Notable examples include Polymarket and Kalshi, which enable users to trade contracts based on various sporting event outcomes, such as game results, point spreads, and player statistics.
“States have the right to oversee their own gaming industries; they have historically been effective in regulating gambling within their jurisdictions,” stated Iowa Attorney General Brenna Bird, a member of the coalition, in a press release. “In Iowa, our legislature creates the laws, and the Iowa Racing and Gaming Commission ensures their enforcement, including tax obligations.”
Bird also noted that some companies are trying to circumvent state regulations. “Several courts have already sided with this coalition, agreeing that sports-related prediction market entities should adhere to individual state gambling laws.”
The coalition argues that prediction markets are primarily being utilized for entertainment-driven gambling rather than genuine financial risk management, which places them outside the CFTC's intended regulatory scope. They contend that established legal precedents support the notion that gambling regulation is a state responsibility.
This filing is a response to the CFTC's call for public input on proposed regulations for prediction markets. The coalition is urging the agency to officially recognize that it lacks jurisdiction over sports-related event contracts, thereby safeguarding the authority of states to regulate or ban sports betting.
Beyond regulatory issues, the attorneys general expressed concerns regarding the potential public health and financial risks linked to sports gambling. The coalition cautioned that millions of Americans could be impacted by problematic gambling behaviors, asserting that states are in a better position than federal agencies to address and mitigate these challenges.
Attorneys general from a diverse array of states have joined this initiative, including representatives from Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, and Wisconsin.