Coalition of 44 state attorneys general says CFTC lacks authority over sports prediction markets

A group of attorneys general from 44 states have sent a letter to the Commodity Futures Trading Commission, arguing that the agency lacks authority to regulate sports-related prediction markets.

The letter, led by Ohio Attorney General Andy Wilson and submitted Monday as the public comment period closed, argues that the CFTC's proposed rule exceeds its statutory authority under the Commodity Exchange Act and that the agency should draft new rules. 

"The CFTC in the Proposed Rule goes well beyond its statutory authority," the letter said. "Given the infirmities with the Proposed Rule, the CFTC should reconsider and draft a new rule consistent with the Commodity Exchange Act and the Constitution."

The CFTC has been locked in legal battles with multiple states over jurisdiction. The agency maintains that several states are unlawfully attempting to regulate federally overseen derivatives markets that fall under the CFTC's "exclusive jurisdiction" under the Commodity Exchange Act (CEA).

However, in the Monday letter, the attorneys general from 44 states argued that the CFTC's proposed rule would "drastically expand federal regulatory authority in an area of major economic and political consequence that states have traditionally regulated."

"States have long regulated gambling—including sports bets. The federal government has not," the letter said.

The debate has also drawn criticism from the sports industry. According to a July 27 letter obtained by The Closing Line, the National Football League urged CFTC Chair Michael Selig to curb sports prediction markets, arguing the agency's proposed rules for event contracts fall short in protecting the integrity of its games and consumers.

Nationwide dispute

The CFTC, together with major prediction market platforms Kalshi and Polymarket, has been fighting state regulators over sports-event contracts across the U.S.

On Monday, a federal judge blocked Minnesota from enforcing its new law banning prediction markets, allowing Kalshi and Polymarket to continue operating in the state while litigation proceeds. The same day, however, a federal judge in New York once again declined to block the state from enforcing its gambling laws against Kalshi.

Last month, a Michigan judge issued a temporary restraining order against Kalshi, blocking the platform from offering sports-related event contracts in the state. Last week, a Washington court granted a request to temporarily block Kalshi from offering sports-related event contracts in the state, saying it operates illegal gambling activities under state law.