A bipartisan alliance of attorneys general from 44 states formally objected to the decision. Commodity Futures Trading Commission‘s (CFTC) Efforts to police sports-related prediction markets, arguing that the agency has no legal power to do so. In a detailed comment letter filed alongside the closing of the public feedback window on the CFTC’s proposed rules, the group called for federal editors They overstep legal boundaries and encroach on long-standing state authority over gambling activities.
Correspondence coordinated by Ohio Attorney General Andy Wilson and his counterparts in Kentucky, Maryland, NevadaNew Jersey, New York, Tennessee and Utah argue that the agency’s draft regulations far exceed the limits set by the Commodity Exchange Act.
Officials argue that the proposal conflicts with constitutional principles, including the doctrines of federalism and the principal questions doctrine, and would be arbitrary if finalized in its current form.
They call on the CFTC to abandon the current approach and create an entirely new framework that explicitly places sports-related event contracts under state rather than federal law. derivatives Oversight.At the heart of the dispute lies a fundamental disagreement about the nature of these products.
Forecasting platforms provide users with: trade contracts based on game results, point spreads, player performances and similar outcomes.
State leaders insist these tools work the same way as traditional sports betting offered by licensed sports betting sites.
While states have regulated gambling, including sports betting, for generations, the federal government traditionally has not done so, so attorneys general say they have jurisdiction.
They emphasize that government systems currently include licensing requirements, consumer protection measures, age restrictions, problem gambling protections, and tax mechanisms that prediction markets currently avoid.
CFTC and the platforms it controls have the opposite view.
They classify event contracts as swaps, a category of derivatives that Congress placed under the commission’s exclusive authority. Commodity Exchange Law and subsequent reforms.
The agency has actively defended its position by filing lawsuits against many states that have attempted to enforce local gaming laws against the exchanges.
These legal battles are continuing in courts across the country, producing mixed early results and raising the stakes of the current rulemaking process.
The states’ letter comes amid explosive growth in prediction market activity, much of it driven by sports bidding.
Volumes increased as platforms expanded their catalogs of event engagements. regulator Traditional sports leagues are concerned and scrutinizing the integrity of the game and consumer protection.
By insisting that sports betting cannot be listed on designated charter markets, the coalition aims to preserve state control and block what it describes as a sweeping federal expansion into an area with major economic and social consequences.
Five states—FloridaGeorgia, New Hampshire, Missouri and Texas declined to participate.
However, the broad turnout underscores widespread state-level resistance to federal preemption claims. Chief Public Prosecutors finalize Any valid rules would need to respect the historical division of power and abandon regulation of the sport gambling where it always belonged: with the doctrinal implications of states.
