State attorneys general push for local control over sports prediction markets

A bipartisan group of 41 state attorneys general is urging the Commodity Futures Trading Commission (CFTC) to confirm that states—not federal regulators—have authority over sports-related “event contracts.”

The coalition submitted a formal comment to the CFTC, arguing that emerging prediction market platforms are functioning as unregulated sportsbooks. These platforms, including popular operators Polymarket and Kalshi, allow users to trade contracts based on outcomes of sporting events, such as game winners, point spreads, and player performance statistics.

“States have the right to govern their own gaming industry; historically, they’ve been successful at regulating gambling within their borders,” Iowa Attorney General Brenna Bird, one of the AGs that form part of the coalition, said in a news release. “Here in Iowa, our legislature makes the laws, and the Iowa Racing and Gaming Commission enforces the laws, including the payment of any taxes required.”

She added that some companies are attempting to bypass these state-level regulations and requirements. “Several courts have agreed with the request of this coalition already that sport-related prediction-market companies should be subject to an individual state’s gambling rules.”

According to the coalition, prediction markets are being used for entertainment-based gambling rather than legitimate financial risk management, placing them outside the CFTC’s intended jurisdiction. The attorneys general argue that established legal precedent affirms gambling regulation as a power reserved for states.

The filing comes in response to the CFTC’s request for public comment on proposed rules governing prediction markets. The coalition is urging the agency to formally confirm that it does not have jurisdiction over sports-related event contracts, thereby preserving states’ authority to regulate or prohibit sports betting activities.

In addition to regulatory concerns, the attorneys general highlighted the potential public health and financial risks associated with sports gambling. The coalition warned that millions of Americans may be affected by problematic or pathological gambling behaviors and argued that states are better positioned than federal agencies to address and mitigate these harms.

Attorneys general from a broad range of states joined the effort, including those from Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, and Wisconsin.