44 states are aligned on one thing in their fight against prediction markets. It's about sports wagering

• The CFTC and prediction market platforms argue event contracts are swaps subject to federal regulation, while states contend sports-related contracts resemble sports betting under their jurisdictional control
• The CFTC's proposed rule defines 'gaming' as activity done for recreation based on skilled outcomes, a definition that CME Group criticized as suggesting federal preemption of state sports regulations
• Court decisions have yielded diverging results across states, with observers expecting the Supreme Court will likely make the final determination on regulatory authority over sports-related event contracts

Summary: 44 States Challenge CFTC Authority Over Sports Prediction Markets

Key Development: Attorneys general from 44 states have formally challenged the Commodity Futures Trading Commission's (CFTC) authority to regulate sports-related event contracts on prediction market platforms. The letter, led by Ohio Attorney General Andy Wilson, coincides with the Monday deadline for public comments on the CFTC's first proposed rule for prediction market regulation.

Core Dispute: The conflict centers on jurisdictional authority. The CFTC and prediction market platforms argue that event contracts are swaps under federal regulation, while states contend sports-related contracts resemble sports betting, which falls under state jurisdiction. Florida, Georgia, New Hampshire, Missouri, and Texas did not sign the coalition letter.

Legal Actions: The CFTC has sued nine states to defend what it views as exclusive regulatory authority over prediction markets, invoking federal preemption arguments. Court decisions have yielded conflicting results—one court blocked platform Kalshi from offering sports bets in a state, while another temporarily blocked a statewide prediction market ban.

Market Context: Prediction market volumes exploded in the past year, primarily driven by sports-related contracts. The 2026 FIFA World Cup significantly boosted platform volumes.

Industry Response: The CME Group challenged the CFTC's proposed "gaming" definition, arguing it represents federal overreach into state sports regulations. Meanwhile, platform Rothera supported the commission's activity-focused definition. Notably, CME partnered with sportsbook DraftKings for a CFTC-regulated sports prediction exchange.

Outlook: Industry observers anticipate the Supreme Court will ultimately determine regulatory authority over sports-related event contracts.