Attorney generals from 44 U.S. states have written to the Commodity Futures Trading Commission (CFTC), challenging its authority to regulate sports-related event contracts on prediction market platforms.

 

The letter, sent at the close of the public comment period for the CFTC's proposed rule and co-led by Ohio Attorney General Andy Wilson and Nevada Attorney General Aaron D. Ford, argues that the CFTC is exceeding its statutory authority with its proposed rule governing sports event contracts.

 

"The Proposed Rule goes beyond the CFTC's statutory powers, is in tension with the Constitution, and would otherwise be arbitrary and capricious in its current form," wrote the coalition of state attorneys general, led by Ohio Attorney General Andy Wilson.

 

"The CFTC should start afresh with its rulemaking and clarify that sports bets and gambling cannot be traded on designated contract markets, but are instead subject to state law."

 

Amid this joint effort to defend state-level control over prediction markets, attorneys general from Florida, Georgia, New Hampshire, Missouri and Texas did not sign the letter.

 

The joint signing of the letter by attorneys general from 44 U.S. states comes as several states remain locked in disputes with the CFTC over jurisdictional authority for sports-related event contracts offered on prediction market platforms.

 

CFTC and States Locked in Jurisdictional Battle

 

While several U.S. states have tried to exert control over prediction markets, the CFTC has continued to assert that it is the only agency with exclusive federal jurisdiction over prediction markets. That is why, in June, it issued a Notice of Proposed Rulemaking to provide greater clarity and establish a framework for determining when sports event contracts may be prohibited.

 

Despite the publication of the proposed rule by the CFTC, states have not stopped cracking down on prediction market platforms. In May, Minnesota became the first U.S. state to outright ban prediction markets, with the ban set to take effect on August 1.

 

However, the CFTC, alongside Kalshi and Polymarket, sued Minnesota and several other states, including Arizona, Connecticut, Illinois, and New York. On Monday, U.S. District Judge Katherine Menendez granted a preliminary injunction blocking the enforcement of Minnesota's ban.