44 states say CFTC has no authority over sports prediction markets

Key Points:

• A coalition of 44 state attorneys general sent a letter to the Commodity Futures Trading Commission (CFTC) arguing that the agency lacks authority to regulate sports-related event contracts on prediction market platforms, urging the CFTC to defer to state laws on sports betting.
• The letter was submitted as the public comment period ended for the CFTC’s first proposed rule on prediction market regulation, which focuses heavily on sports-related contracts and has sparked a jurisdictional dispute between states and the federal agency.
• The CFTC and prediction market platforms classify all event contracts as swaps under federal regulation, while many states contend sports-related contracts resemble sports betting, which falls under their jurisdiction.
• Industry players are divided: CME Group criticized the CFTC’s definition of "gaming," fearing federal overreach, while the prediction market platform Rothera supports the CFTC’s approach to defining gaming based on the activity rather than wagering.
• Legal battles continue nationwide, with courts issuing conflicting rulings on prediction market offerings, and the Supreme Court is expected to ultimately decide the regulatory authority over sports-related event contracts.