Congress Should Not Be Silent in Sports Event Contract Debate

• A House Committee on Agriculture subcommittee today held a hearing on consumer protections and market integrity in sports event prediction markets
• Five witnesses provided testimony on the issue of sports event prediction markets and how they impact customers throughout the country
• Subcommittee Chairman Rep. Dusty Johnson (R-SD) said Congress should not be silent during the discussions

A House Committee on Agriculture subcommittee today discussed issues of consumer protection and market integrity in the sports event prediction markets, listening to more than two hours of testimony which saw such suggestions as banning sports event contracts throughout the U.S., fully staffing and dedicating more resources to the Commodity Futures Trading Commission (CFTC) to better regulate the markets, and allowing the markets to co-exist as they are alongside sports betting products.

While the legality and regulatory authority of sports event contracts is being fiercely debated in the courts and states, subcommittee Chair Rep. Dusty Johnson (R-SD) today said it is abundantly clear that Congress cannot afford to be silent on the issue.

“The courts are acting in this space, the commission is acting in this space. I do not believe that this committee, that Congress should be silent. I do think there is work for us to do here. I agree with chair Thompson’s statement that this will not be the last hearing we have in this space. We have an obligation to drive towards finding out what is the common ground. More than one witness today said there is need for additional clarity. It may bet that the courts and commission alone can provide that needed clarity, yet if we don’t ask whether or not there’s an important role for Congress, we are not doing our job,” he said.

Who Has Regulatory Authority?

Five witnesses and members of the House Committee on Agriculture Subcommittee on Commodity Markets, Digital Asses, and Rural Development discussed the CFTC’s ability to effectively regulate the event contract markets, particularly sports event contracts, and how they can impact state sports betting markets and regulations.

Congress has permitted regulatory authority of the sports event contract market to the CFTC, Robert A. Schwartz, Partner, Morgan, Lewis & Bockius, and former general counsel of the CFTC, told the subcommittee, and this should remain moving forward.

If Congress feels differently, Schwartz said, it should amend the Commodity Exchange Act accordingly.

“Finally of course, Congress itself can prohibit contracts that involve any subject matter to which it objects. It famously did so for onions in 1958 and box-office receipts in 2010. If Congress today believes that exchanges should not offer contracts based on sports events, or politics, or anything else, it should amend the CEA and require the CFTC to carry out its mission accordingly,” he told the subcommittee.

The sports event prediction market in no way affects state or tribal ability to offer or regulate sports betting, Carl Kennedy, partner and co-chair, Financial Markets and Regulation Practice, Katten Muchin Rosenman LLP, told the subcommittee.

This is all about choice, Kennedy said. Citizens can buy gold bullion from a local dealer under state law, trade gold futures under the CFTC, and purchase gold ETFs through the U.S. Securities and Exchange Commission (SEC), each offering customers a unique lane to enter the gold markets.

It is the same with sports betting market. Customers have the choice to participate in sports betting markets through state or tribal regulated platforms, but also have the lane to do so under the CFTC through the prediction markets.

“The choice at the end of the day for a customer looking for exposure to this should be left to the user,” he said.

The CFTC also provides strong protections for customers choosing to engage in these markets, Asaf Meir, co-founder and chief executive officer of Solidus Labs, told the subcommittee.

“This commitment ensures that users of CFTC-regulated prediction markets, whether they trade on sports, economic, or political outcomes, receive the same level of protections as investors in America’s most established derivatives markets. We also believe the CFTC has been effective in providing specific guidance as part of its ongoing rulemaking effort,” he said.

Gambling By Any Other Name

Despite the protections in place from the CFTC, Chris Cylke, senior vice president of government relations for the American Gaming Association, urged the subcommittee to realize that sports event contracts allow operators to offer unregulated sports betting without any responsible gaming requirements throughout the country to a younger, and potentially more vulnerable, population of users.

The CFTC was never intended to serve as a nationwide gambling regulator, he said, which it currently finds itself doing for prediction market operators.

“These products function as sports wagers in every meaningful sense, yet they are being offered outside the state and tribal regulatory frameworks that Congress, states, tribes, and voters have spent decades building. That approach bypasses state law, disregards tribal sovereignty, avoids licensing and tax obligations, weakens consumer protections, and places the CFTC in the position of serving as a de facto national sports betting regulator,” he said.

Adding to the muddled nature of the markets and furthering a divide between state regulations and prediction markets, David Bean, Chairman of the Indian Gaming Association, told the subcommittee to look no further than CFTC Chairman Michael S. Selig recently order prediction market operator Kalshi to defy a court order to cease activity within Michigan’s border.

Sports betting through prediction markets tramples on tribal and state government sovereignty.

“However, the current one-person CFTC has removed local governments from the online gambling debate, proclaiming that online sports betting is now legal on every Indian reservation and in every state. No one voted for this, and Congress did not pass a law to authorize online sports gambling,” he said.

It also puts vulnerable populations at risk with little to no oversight for responsible gaming, Bean noted. Prediction market operators allow those as young as 18 to participate in sports event contracts and have little to no safeguards for responsible gaming.

In addition to the invited witnesses, subcommittee member Rep. Jill Tokuda (HI-D) said the current structure flies in the face of the 11 states in the U.S. that have not legalized sports betting. Prediction markets have actively been marketed as gambling and sports betting by prediction market operators over the course of this past year.

“This is gambling. It’s gambling,” she said.

Does CFTC Have Manpower for Regulatory Framework?

For most of 2026, the CFTC has only had one sitting member, Chairman Selig, with the remaining four seats vacant. In addition to these vacancies, CFTC staff has been downsized by more than 20% since 2020, Schwartz said. The CFTC has long had a reputation for doing “more with less,” he said, but additional resources would help it further carry out its regulatory responsibilities.

Prediction market platforms also act as their own regulators, Kennedy noted, as any self-certified contracts must meet 23 distinct core principles, including one requiring the contract not be readily susceptible to manipulation. These are not rubber stamped into approval, he said.

“On top of that, the special rule, which I fully described in my written remarks, gives the commission a real backstop. Within 10 days of a listing, it can open a public interest review within a defined 90 day process. If the agency finds the contract contrary to public interest, the contract comes down. That’s not a loophole. That’s active oversight with real teeth,” he said.

Not Final Hearing

Johnson concluded the hearing with a summation of four key points he picked up from discussion and testimony during the hearing. While the CFTC has important work before it and has a reputation of doing “more with less,” resource adequacy is a legitimate concern.

Additionally, both the committee and panel agree on the important of market integrity and customer protections, the subcommittee needs to further explore whether or not there are sufficient tools to ensure these safeguards.

This will not be the final hearing on this issue, Johnson assured the attendees.