URGENT UPDATE: A bipartisan group of U.S. Senators is taking a stand against the Commodity Futures Trading Commission (CFTC) over its recent actions regarding the expansion of prediction markets linked to sports betting. Senators Catherine Cortez Masto (D-NV) and John Curtis (R-UT) are circulating a draft letter demanding immediate clarification from Caroline Pham, the acting CFTC Chair, following concerns that the agency is enabling unregulated sports wagering products.
The Senators’ draft, which is rapidly gaining signatures, criticizes the CFTC for allowing companies to promote their sports betting products as regulated “event contracts.” This move is seen as a direct challenge to federal laws that ban gaming contracts, raising alarms about the implications for state and tribal authorities that currently oversee sports wagering.
Senators argue that by permitting these nationwide sports betting products, the CFTC risks undermining the power of states and tribes to regulate gambling within their borders—a power affirmed by the Supreme Court. The draft highlights troubling examples where companies claim they can facilitate betting across all 50 states, contradicting existing legal frameworks.
As scrutiny intensifies on the prediction market sector, platforms such as Kalshi have begun self-certifying their sports event contracts with the CFTC, particularly ahead of major sporting events like the Super Bowl. Critics warn these contracts mirror traditional sports bets but lack essential safety measures mandated for state-licensed operators, including age verification and responsible gaming protocols.
Industry representatives, alongside tribal regulators, have expressed deep concern that unchecked federal oversight could erode local gambling laws and established regulatory structures. The Senators echo these sentiments in their draft, stressing the need for the CFTC to act decisively. The letter warns that failure to intervene could set a dangerous precedent, potentially transforming gambling policy into a federal issue—a domain historically managed by states and tribal governments.
Currently, the CFTC’s regulations do not explicitly address sports events, allowing operators to categorize their offerings as event contracts without clear guidelines. This ambiguity has sparked intense debate about whether these products should be classified as permissible financial instruments or illegal gambling activities.
As the situation develops, the Senators are urging the CFTC to clarify its stance. Their draft strongly asserts that the Commission cannot simply bypass congressional bans on gambling by rebranding bets as event contracts. If the letter is finalized and sent, it would significantly pressure the CFTC to address the growing concerns surrounding prediction markets and their implications for state and tribal sovereignty.
Stay tuned for updates on this critical issue as it unfolds.
