44 State Attorneys General Push to Pull Sports Prediction Markets from Federal Oversight

44 state attorneys general are demanding that the future of sports prediction markets be taken out of CFTC's hands and placed under state jurisdiction.

The Federal‑State Clash: Roots of the Dispute

The commission’s attempt to regulate sports‑centric contracts collides with states’ exclusive gambling authority. After the 2026 FIFA World Cup drove prediction platforms to record volumes, the tension intensified.

CFTC’s Draft Rule: Stretching the Boundaries

The commission seeks to classify all event contracts as swaps, defining "gaming" as "recreational activity with measurable outcomes based on skill." This frames sports betting as a financial product rather than a gambling activity.

Attorneys General Letter: Core Demands and Exceptions

■The rule exceeds CFTC’s statutory authority

■It conflicts with the Constitution and is arbitrary

■Sports betting should remain subject to state law

■Signatures from Florida, Georgia, New Hampshire, Missouri, and Texas are absent

Market Participants React: CME and Rothera Speak Out

■CME Group: Argues the "gaming" definition targets the sport itself, preempting state regulations and overreaching federal power.

■Rothera CEO Thomas Chippas: Insists the definition must focus on "wagering"; otherwise every event contract would fall under the rule.

Court Battles and Uncertain Outlook

■A Michigan judge blocked Kalshi from offering sports bets in the state.

■A federal judge in Minnesota temporarily halted a statewide ban on prediction markets.

■The ultimate decision is likely to rest with the U.S. Supreme Court.

Markets will watch closely as this regulatory showdown resolves. The uncertainty around liquidity and volatility of sports‑prediction contracts could lift risk premiums. A revised CFTC rule would lower compliance costs for exchanges and sportsbooks while bolstering states’ gambling revenues. In the long run, the balance between federal and state authority will dictate the growth trajectory of prediction markets.