TheBlock
Attorneys general from 44 states told the CFTC this week that the agency lacks authority to regulate sports-related prediction markets and urged it to draft rules consistent with the Commodity Exchange Act. The bipartisan letter, reported by multiple outlets, lands as the CFTC weighs whether event-contract venues such as Kalshi and Polymarket fall under federal jurisdiction at all.
Why it matters
The state AGs argue that sports betting has historically been regulated state by state under gaming and gambling law, and that prediction-market contracts on athletic outcomes are functionally indistinguishable from wagers. If the CFTC accepts that framing, federal oversight of event contracts narrows sharply, and platforms would face a patchwork of state-level licensing, geofencing, and consumer-protection rules instead of one federal perimeter.
Market impact
Kalshi and Polymarket have spent the last two years pushing into sports markets on the strength of CFTC-registered status. A federal carve-out would not shut those books down, but it would force them into 44 separate conversations with state regulators, raise compliance costs, and likely pull sports contracts behind state lines the way traditional sportsbooks already are. The political signal is hard to read the other way: 44 AGs crossing party lines on a single letter is the kind of coordination that travels when Congress starts asking the same questions.
Frequently asked questions
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What did the 44 state AGs actually ask the CFTC to do?
They asked the CFTC to acknowledge it lacks authority over sports prediction markets and to draft new rules consistent with the Commodity Exchange Act, leaving sports-event contracts to state regulators.
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Why do state AGs think sports prediction markets are not a federal issue?
They argue sports betting has historically been regulated state by state under gaming and gambling law, and that prediction-market contracts on athletic outcomes are functionally wagers, not derivatives.
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Which platforms would be most affected if the CFTC agrees?
CFTC-registered event-contract venues such as Kalshi and Polymarket, which have built sports markets on the strength of federal registration, would face a patchwork of state licensing and geofencing rules.
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Does this letter shut down Kalshi or Polymarket sports markets?
No. It would force both platforms into 44 separate conversations with state regulators, raise compliance costs, and likely push sports contracts behind state lines, but it does not by itself halt trading.
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Is this a bipartisan action?
Yes. Attorneys general from 44 states signed on, crossing party lines on a single letter, which is unusually broad coordination on a financial-regulation question.
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