Gaming Groups, 44 States Protest CFTC Proposal Giving Prediction Markets a Role in Sports Betting

A coalition of major gaming industry organizations and attorneys general from 44 states have formally told the Commodity Futures Trading Commission that its proposed rules for prediction market event contracts would strip states and tribes of authority they have held over regulated wagering for decades. The pushback, filed in a wave of comments submitted as the public comment period closed on July 27, targets a Commission plan that would give federal regulators broad power to decide which sports-related contracts can be listed for trading nationwide.

The American Gaming Association, the Indian Gaming Association, and the Association of Gaming Equipment Manufacturers each submitted detailed objections, arguing the Commission is trying to build a national gambling regulatory scheme despite having no statutory mandate or expertise to do so. The states’ coalition, led by Ohio Attorney General Andy Wilson, echoed that concern in its own filing, saying the proposal “takes a sledgehammer to the states’ historic power” over gambling.

What the CFTC Is Actually Proposing

The rule at the center of the fight would amend CFTC Regulation 40.11 and add a new Appendix F governing how the Commission decides whether sports-related event contracts are “contrary to the public interest” under the Commodity Exchange Act. Under the proposed framework, contracts settled on objective, league-verified outcomes — final scores, point differentials, win-loss results, tournament advancement — would generally be permitted, while contracts tied to player injuries, officiating calls, or discrete in-game actions would be viewed far more skeptically.

Critically, the proposal would let prediction markets self-certify new contracts and begin listing them before the Commission ever reviews them. The review clock only starts after listing, and the Commission has just 10 days to open an inquiry — with a final decision not required for up to 90 days. Gaming groups say that structure effectively lets contracts go live with minimal upfront oversight, a trading volume the Commission itself pegs at more than $25 billion in 2025.

Industry and State Objections

AGEM President and CEO Daron Dorsey said the plan would bypass “state, tribal, and federal regulatory processes that have governed the gaming industry for decades” and hand a single financial regulator authority it was never built to exercise. He warned the loose review window could even open the door to contracts resembling online slot machines or poker outcomes if the Commission doesn’t intervene in time.

AGA President and CEO William C. Miller Jr. was blunt in his own filing, stating the Commission “lacks both the expertise and resources to replace the more than 8,400 state and tribal regulators who oversee legal gaming today,” and calling for the proposed revisions to be withdrawn entirely. Indian Gaming Association Chairman David Z. Bean went further, calling the plan “an insult to the principles of tribal sovereignty” that would undercut protections built into the Indian Gaming Regulatory Act over nearly 40 years. Bean also noted that the majority of federally recognized tribes and at least 20 states still prohibit online sports betting outright, citing underage and problem gambling risks the CFTC proposal doesn’t account for.

The 44-state coalition’s comment letter argued the rule “is in tension with the Constitution and would otherwise be arbitrary and capricious,” urging the Commission to start over and explicitly affirm that sports wagering remains subject to state law rather than federal financial market rules.

A Fight Already Playing Out in Court

The regulatory dispute isn’t confined to comment letters. A federal judge recently paused enforcement of a new Minnesota law that sought to bar prediction markets outright, ruling in favor of the CFTC and operators Kalshi and Polymarket on the grounds that some contracts may qualify as federally regulated financial instruments. Separately, a U.S. District Court judge denied the Commission’s request to block Wisconsin from applying its own gambling laws against prediction market operators in that state. The Commission has now sued multiple states over the issue and been sued by others in return, leaving the legal boundary between state gaming law and federal commodities regulation unresolved even as the rulemaking process continues.

With the comment period now closed, the CFTC is expected to weigh the record — which drew more than 1,400 responses — before moving toward a final rule, one gaming groups say could reshape how prediction markets and traditional sports betting platforms coexist across the country.