44 U.S. state attorneys general say CFTC lacks authority over sports prediction markets

Attorneys general from 44 U.S. states submitted a comment letter arguing the U.S. CFTC lacks authority over a proposed rule on sports-related prediction market contracts and should revise it entirely, CNBC reported. They argued the contracts are not derivatives but sports betting and gambling under state jurisdiction, and said the agency should make clear they are subject to state law rather than being allowed to trade on designated contract markets, or DCMs. Unlike the attorneys general who challenged the CFTC’s jurisdiction itself, CME Group took issue with the agency’s definition of "gaming," arguing the CFTC defined it as sporting events themselves rather than betting money on sports. CME Group said that definition would give the Commodity Exchange Act priority over state sports regulation and expand the agency’s authority too far. The CFTC and prediction market platforms, meanwhile, maintain all event contracts are derivatives under the CFTC’s jurisdiction. The CFTC is currently in litigation with nine U.S. states over its authority to regulate prediction markets, while courts in states including Michigan and Minnesota have issued conflicting rulings on whether such markets should be allowed.