Forty-four state attorneys general have told the Commodity Futures Trading Commission it has no authority over sports event contracts. The CFTC has already sued nine states to argue the opposite, and two federal appeals courts have split the difference.
The jurisdictional fight over sports prediction markets escalated in late July 2026, when attorneys general from 44 states wrote to the Commodity Futures Trading Commission (CFTC) rejecting its claim to regulate sports-related event contracts. The letter landed as the comment period closed on the CFTC’s first proposed rule for prediction markets — a rule the agency intends as the framework for a product that state gambling regulators believe is theirs to police. The dispute now runs through at least two federal appeals courts and more than a dozen active state lawsuits.
Key Facts:
• 44 state attorneys general signed the letter telling the CFTC it lacks authority over sports event contracts — filed as the agency’s comment period expired, late July 2026
• The CFTC has sued nine states to defend what it describes as its exclusive regulatory right
• On April 6, 2026 the Third Circuit became the first federal appellate court to hold that the Commodity Exchange Act preempts state gambling law for sports event contracts on CFTC-registered designated contract markets — Holland & Knight
• On April 16, 2026 the Ninth Circuit heard consolidated arguments from Kalshi, Robinhood and Crypto.com against the Nevada Gaming Control Board (NGCB)
• More than a dozen states have active litigation that could change platform access
What the attorneys general are arguing
The states’ position is a question of statutory reach rather than of whether prediction markets are good or bad. The CFTC’s authority derives from the Commodity Exchange Act, which governs derivatives — futures, swaps, options. The attorneys general contend that a contract paying out on the result of a football game is not a commodity derivative in any meaningful sense; it is a wager, and wagering is regulated at state level under each state’s own gambling statutes.
Forty-four signatures is close to unanimous, and it crosses party lines. That matters because it removes the usual framing of a partisan dispute and reframes it as states collectively defending a licensing and tax base. Regulated sportsbooks pay state licence fees and state tax on gross gaming revenue; a federally regulated event contract offering the same economic exposure does not. Every state that has legalised sports betting has built revenue expectations on the first model.
Where the courts have landed
The judicial picture is genuinely unsettled, which is why the letter matters more than a comment-period filing normally would.
The Third Circuit ruled on April 6, 2026 that the Commodity Exchange Act preempts state gambling laws as applied to sports event contracts traded on CFTC-registered designated contract markets. That was the first federal appellate decision on the question and it favoured the platforms. Ten days later, on April 16, the Ninth Circuit heard consolidated oral arguments in the challenges brought by Kalshi, Robinhood and Crypto.com against the Nevada Gaming Control Board.
A split between circuits is the standard route to Supreme Court review. Until then, access depends on geography. Nevada currently holds the most restrictive posture, with the major platforms blocked. Massachusetts, Michigan and Washington limit sports event contracts under court orders. The remaining states sit somewhere between open access and pending litigation.
What this means for bettors
Market impact: the practical effect is fragmentation. A product available in one state may be blocked in the next, and a single appellate ruling can change that overnight. For anyone comparing prices between a regulated sportsbook and an event contract, the relevant risk is not pricing — it is whether the venue remains accessible through the life of a long-dated position.
What to watch: the Ninth Circuit’s decision is the nearest catalyst. A ruling against the platforms creates the circuit split that makes Supreme Court review likely, and would probably harden the position in the states already operating under court orders. A ruling for the platforms aligns the Ninth with the Third and weakens the states’ leverage considerably, whatever 44 attorneys general have written.
Where the legal markets stand: in Nevada, the NGCB regulates licensed sports betting and has taken the hardest line against event contracts. In New Jersey, the Division of Gaming Enforcement (NJDGE) oversees a mature regulated market whose operators have a direct commercial interest in the outcome — two of the largest, FanDuel and DraftKings, resigned from the American Gaming Association over the industry’s handling of prediction markets in July 2026.
Informational only — not betting or financial advice. Regulatory positions described here are current as of August 7, 2026 and are subject to active litigation. 18+ / 21+ depending on jurisdiction.
FAQ
Q: Are sports prediction markets legal in the US?
A: It depends on the state and the litigation. The Third Circuit held in April 2026 that federal law preempts state gambling rules for sports event contracts on CFTC-registered markets, but Nevada blocks the major platforms and Massachusetts, Michigan and Washington limit them under court orders.
Q: Why do 44 states oppose CFTC authority here?
A: They argue a contract settling on a sports result is a wager rather than a commodity derivative, and that wagering falls under state gambling statutes. The practical stake is the state licence-fee and gaming-tax base that regulated sportsbooks pay and event contracts do not.
Q: What happens next?
A: The Ninth Circuit’s ruling in the Kalshi, Robinhood and Crypto.com challenges against the Nevada Gaming Control Board is the nearest decision point. A result conflicting with the Third Circuit would create a circuit split and make Supreme Court review considerably more likely.
For background, see our reporting on FanDuel and DraftKings quitting the AGA over prediction markets and on Kalshi’s New York ruling and the Supreme Court deadline.
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