Prediction Market Fight Deepens as 40 States Push Back on CFTC

States Say Sports Markets Belong Under Gambling Oversight

A multistate conjugation sent an April 30, 2026, missive to Commodity Futures Trading Commission (CFTC) Chairman Michael S. Selig, arguing that sports-related prediction markets should stay nether authorities gambling oversight alternatively than national derivatives regulation. The attorneys wide said the CFTC lacks exclusive authorization implicit these contracts due to the fact that they relation arsenic wagers, not swaps oregon different fiscal instruments.

The missive draws a crisp enactment betwixt derivatives markets and sports betting. The states said prediction market users tin wager connected crippled winners, constituent spreads, totals, and idiosyncratic subordinate statistics, intimately matching sportsbook activity. The missive states:

“Traditional sports bets and sports-related lawsuit contracts offered connected designated declaration markets (‘DCMs’) person nary meaningful differences.”

The conjugation argued that a caller statement does not alteration the underlying transaction. Bettors inactive hazard wealth connected uncertain sports outcomes for imaginable payouts.

Federal Court Fights Raise Stakes for Kalshi Contracts

The attorneys wide besides challenged whether sports contracts suffice arsenic swaps nether the Commodity Exchange Act. They said swaps indispensable impact events tied to financial, economic, oregon commercialized consequences. Game results and subordinate statistics, they argued, bash not make the benignant of measurable economical vulnerability that derivatives are designed to hedge. Expanding national derivatives instrumentality to screen sports betting, the missive warned, would determination a accepted state-regulated enactment into CFTC control.

That combat intensified successful 2026. A national tribunal successful Tennessee granted Kalshi a preliminary injunction connected Feb. 19 aft concluding Kalshi was apt to win connected arguments that the contracts suffice arsenic swaps nether the Commodity Exchange Act. On April 6, the Third Circuit affirmed an injunction against New Jersey, holding that national preemption apt shields Kalshi from authorities gambling enforcement. The CFTC besides joined national prosecutors successful April successful a first-of-its-kind prediction market insider trading lawsuit involving an Army worker accused of utilizing nonpublic authorities information.

The states warned that expanded national oversight could weaken protections built astir gambling risks. Their missive cites licensing rules, minimum property limits, voluntary exclusion programs, suspicious enactment reporting, and restrictions meant to support sports integrity. The attorneys wide said the CFTC’s model is built for fiscal markets, not gambling harms specified arsenic addiction, fiscal distress, and improper wagering by insiders oregon sports participants. The missive states:

“States person the expertise, experience, and tools to modulate sports betting arsenic they person for much than a century.”

The missive was signed by attorneys wide from Ohio, Nevada, New Jersey, New York, Tennessee, Utah, Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, New Mexico, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Vermont, Virginia, and Wisconsin. The District of Columbia besides joined.