UPDATE: A bipartisan coalition of senators is urgently challenging the Commodity Futures Trading Commission’s (CFTC) recent approval of nationwide sports betting contracts, expressing alarm over the potential implications for state-regulated gambling. Senators Catherine Cortez Masto (D-NV) and John Curtis (R-UT) are rallying support for a draft letter targeting Caroline Pham, the acting CFTC Chair, as concerns mount over the agency’s regulatory approach.
The letter, which is rapidly gaining signatures, critiques the CFTC for permitting companies to market sports betting as regulated “event contracts.” Lawmakers argue that this move undermines Congressional restrictions established when federal gaming contracts were banned. The draft asserts that the CFTC’s actions allow companies to promote sports betting across all 50 states, disregarding the authority of states and tribes to regulate gambling within their jurisdictions.
The senators highlight alarming statements from operators claiming they can facilitate betting nationwide, challenging the integrity of existing state laws. They warn that the CFTC’s inaction could dilute state authority over gambling, a power affirmed by the Supreme Court.
As the landscape of prediction markets evolves, platforms like Kalshi have begun to self-certify sports event contracts with the CFTC, particularly ahead of major events such as the Super Bowl. Critics argue that 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 and tribal regulators echo the senators’ concerns, fearing that federal oversight could undermine local laws and erode the hard-won regulatory framework established by states and tribes. The draft warns that without decisive action from the CFTC, gambling policy risks becoming a federal issue, diverting control from those who have historically managed it.
Currently, the CFTC’s regulations do not specifically address sports events, allowing operators to label their offerings as event contracts independently. This has sparked contentious debates regarding whether these products qualify as permissible financial instruments or forbidden gambling activities. The senators are now pressing the CFTC to clarify its stance on this critical issue.
Should this draft letter secure approval, it would significantly increase pressure on the CFTC to articulate its position and potentially revise its approach to prediction markets, impacting gambling practices across the nation.
As this story develops, the stakes remain high for both state regulators and the growing sports betting industry. Stay tuned for updates on this urgent issue that could reshape the future of sports wagering in the United States.