Forty-four state attorneys general have told the CFTC it has no business regulating sports bets, drawing the clearest battle line yet in the fight over who controls prediction markets.
One Message: Sports Bets Belong to the States
In a bipartisan comment letter led by Ohio Attorney General Andy Wilson, the coalition argued that the CFTC’s proposed prediction-market 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.”
They urged the agency to start over and confirm that sports bets and gambling cannot trade on designated contract markets but fall under state law instead.
The core argument is that the line between a sportsbook bet and a prediction-market contract is illusory. The states contend the platforms function as unregulated sportsbooks, that they have regulated sports betting for more than a century while the CFTC has no such expertise, and that the contracts sidestep state licensing, taxes, and integrity rules.
The letter arrived as the comment period on the CFTC’s first prediction-market rule closed Monday night, and the coalition has been growing, from roughly 40 attorneys general in the spring to 44 now.
The Battle Lines Are Now Drawn
The filing is one side of a record that split cleanly at the deadline. Ranged against the CFTC’s approach are the 44 states, the NFL and Major League Baseball, the American Gaming Association, and consumer groups, all urging the agency to narrow or abandon the rule.
On the other side sits the crypto and prediction-market industry. In the same window, Coinbase, Hyperliquid, Multicoin, and an industry coalition urged the CFTC to finalize a clear federal framework, arguing that a single national standard beats a patchwork of fifty state gambling regimes. More than 1,000 comments landed in all.
Even a Derivatives Exchange Broke Ranks
The split did not run neatly along industry lines. CME Group, itself a derivatives exchange, warned the CFTC that defining “gaming” as the game rather than the wagering on it would let the Commodity Exchange Act preempt state sports law, which it characterized as a striking overreach.
The position is notable because CME operates the CFTC-regulated exchange behind sportsbook FanDuel’s prediction markets. An established exchange siding with the states against the agency’s own definition underscores how contested the rule’s central terms remain.
Five States Sat It Out
For all its breadth, the coalition was not unanimous by omission. Florida, Georgia, New Hampshire, Missouri, and Texas did not sign, a conspicuous absence given the size of several of those states and their prominence in gambling policy. The letter’s bipartisan framing makes those abstentions stand out rather than blend in.
A Record Built for the Courtroom
The deeper purpose of the letter is to prepare for a fight the states have largely been losing. Its emphasis on the Administrative Procedure Act and constitutional limits reads as groundwork for litigation once the CFTC finalizes its rule, which analysts noted the filing appears designed to enable.
That timing matters because the courts have so far leaned federal. A federal appeals court affirmed the CFTC’s exclusive jurisdiction over Kalshi’s contracts this spring, and the agency has gone on offense with preemption suits against nine states. Having struggled to win on preemption in court, the states are now working to shape the rulemaking record itself so that whatever the CFTC finalizes starts its inevitable legal challenge on ground the states helped build.
Also Read: Coinbase Files CFTC Letter Backing Prediction Market Framework
