The Commodity Futures Trading Commission (CFTC) fielded more than 1,500 public comments related to oversight of prediction markets that operate within the United States. From social media to legacy outlet editorials, public debate over whether prediction market exchanges should be regulated at the federal level or fall under the jurisdiction of state-based gaming governance took on a life of its own over the weekend.
On Friday, the top prosecutor for the state of New Jersey, Jennifer Davenport, led a total count of 41 state attorneys general in a public comment letter on Friday. The communication categorizes prediction market event contracts as “sports gambling” that are best regulated by individual state gaming authorities.
“Any distinction between sportsbook bets and prediction-market bets is illusory,” reads the letter. “The CFTC should recognize the limits of its power and affirm that states have the expertise, experience and tools to regulate sports betting as they have for more than a century.” The letter is in response to a March 12th CFTC memo that opened public comments on the matter.
Tribes, state gaming agencies, politicians in jurisdictions where online sports betting is regulated, and current US-facing regulated sportsbook apps are among the opponents to federal oversight of prediction market apps. Even professional sports leagues like the NBA, which has yet to formally partner with prediction market apps, weighed in on the benefits of state regulation back in 2025.
Other key figures who are calling on the CFTC to recognize prediction exchanges’ event contracts as sports betting that should be state-regulated include Nevada Congresswoman Dina Titus and Pennsylvania Gaming Control Board Executive Director Kevin O’ Toole. Prediction market “event contract” skeptics believe that if exchanges are able bypass state gaming regulatory infrastructure, they could have a significant impact on the market share of state-based online sportsbook apps.
A recent study by research firm Eilers & Krejcik hints that apps like Kalshi, Coinbase, and Polymarket are filling a vacuum more than cannibalizing regulated online sports betting. The states of Texas and California, where online sports betting is not regulated, accounts for nearly half of prediction markets’ sports-related forecasting volume.
The CFTC, headed by Chairman Mike Selig, has reiterated that the federal agency retains exclusive jurisdiction over the regulation of prediction markets. To date, this stance is reflected in five separate legal actions by the Commodity Futures Trading Commission against the states of Illinois, Connecticut, Arizona, New York, and Wisconsin.
Coinbase, Kalshi, and Polymarket are in lockstep with the CFTC’s view that states can’t use their own gambling laws to hinder the operations of prediction markets in their respective regions. “Congress assigned this domain to the CFTC for a reason: consistent, national oversight of derivatives markets,” stated Coinbase Chief Policy Officer Faryar Shirzad, citing the company’s own public comment letter to the CFTC. “Fragmented state-by-state intervention risks undermining that framework and creating regulatory conflict in markets that are inherently interstate.”
Loading …
