States Challenge CFTC Over Sports Prediction Markets
- A coalition of attorneys general from over 40 states argues that sports-related prediction markets should remain under state gambling oversight.
- The states claim these markets function as wagers, not federally regulated derivatives like swaps.
- Federal courts have granted Kalshi preliminary injunctions, supporting its contracts as swaps under the Commodity Exchange Act.
- The CFTC and federal prosecutors are involved in a unique insider trading case related to prediction markets.
- States warn that federal oversight could weaken protections against gambling risks such as addiction and insider wagering.
A multistate coalition is pushing back against the Commodity Futures Trading Commission’s (CFTC) authority over sports-related prediction markets, arguing they should be regulated as gambling activities by individual states rather than as financial derivatives at the federal level.
Courts have sided with Kalshi, which claims its contracts qualify as swaps under existing laws, intensifying the debate on jurisdiction between state and federal authorities over these markets.(Source)
