44 State Attorneys General Challenge CFTC Authority Over Sports Prediction Markets

TL;DR

• State Challenge: Forty‑four attorneys general told the CFTC its proposed rule on sports Prediction Markets exceeds federal authority and intrudes on areas states traditionally regulate.
• Industry Concerns: The NFL urged the CFTC to tighten oversight of sports‑related contracts, arguing current proposals do not sufficiently protect game integrity or consumers.
• Nationwide Litigation: Courts in Minnesota, New York, Michigan, and Washington issued conflicting rulings on Kalshi and Polymarket.
  

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A nationwide coalition of attorneys general from 44 states has escalated the fight over sports‑related Prediction Markets, telling the Commodity Futures Trading Commission that the agency is overstepping its authority. Their letter, submitted Monday as the public comment window closed, argues that the CFTC’s proposed rule stretches beyond what the Commodity Exchange Act allows and should be rewritten. The dispute adds fresh tension to an already active legal landscape, where states and federal regulators continue to clash over who controls sports‑event contracts.

State Pushback Against Federal Expansion

Led by Ohio Attorney General Andy Wilson, the group contends that the CFTC’s proposal would dramatically widen federal oversight in an area states have historically governed. They argue that gambling, including sports bets, has long been a state responsibility, and that the federal government has not traditionally regulated it. The letter states that the CFTC’s approach goes beyond its statutory limits and risks reshaping a space with major economic and political implications.

The agency, however, maintains that several states are attempting to regulate derivatives markets that fall under its exclusive jurisdiction. The sports industry has also entered the debate. A July 27 letter from the National Football League urged CFTC Chair Michael Selig to rein in sports Prediction Markets, arguing that the agency’s event‑contract framework does not adequately protect game integrity or consumers.

Court Battles Across the Country

The jurisdictional fight is unfolding in courts nationwide. On Monday, a federal judge blocked Minnesota from enforcing its new ban on Prediction Markets, allowing Kalshi and Polymarket to continue operating while litigation moves forward. That same day, a New York judge again declined to stop the state from applying its gambling laws to Kalshi. Recent rulings in Michigan and Washington have also restricted Kalshi’s ability to offer sports‑related contracts.

Judges in both states issued temporary orders blocking the platform, finding that its activities fall under state gambling prohibitions. These decisions underscore how fragmented the regulatory landscape has become as states and the CFTC continue to battle over the future of sports Prediction Markets.