44 Attorneys General Oppose CFTC Authority Over Sports Prediction Markets

A massive legal storm is brewing in the United States that could shake the foundations of gambling regulation. An alliance of 44 attorneys general from various U.S. states has formally spoken out against plans by the Commodity Futures Trading Commission (CFTC). The agency, which is actually responsible for commodity and futures trading, wants to expand its power to so-called prediction markets, where users can bet on the outcome of sporting events. The attorneys general see this as an impermissible encroachment on rights that have resided with the individual states for decades. The core of the conflict lies in the definition of gaming and how it is interpreted within the framework of the Commodity Exchange Act.

The resistance is not only supported by the chief prosecutors of the states but also by industry heavyweights such as the Casino Association of New Jersey (CANJ). This association represents the nine casinos in Atlantic City and sees the integrity of existing state oversight at risk. In a joint letter, the CFTC is accused of having made an arbitrary U-turn. While the agency previously argued that sports contracts were not gaming within the meaning of financial laws, it is now trying to enforce exactly this definition to bring the booming market under control.

Numbers and facts

The level of interest in these financial bets is shown by data from the Kalshi platform. During the 2026 FIFA World Cup, the company recorded more than 3 million new registrations. Sports-related contracts account for a massive share of the volume on such exchanges, according to the Pew Research Center. At Kalshi, around 80 percent of the total trading volume has been on sports topics since July 2024, while at competitor platform Polymarket it was at least 39 percent. These figures make it clear that this is no longer a niche for financial experts, but a mass market for sports fans.

The CFTC now wants to define gaming as activities undertaken for recreation or entertainment, governed by established rules, and based on outcomes determined by participants' skill or measurable events. The attorneys general argue that the Commodity Exchange Act does not grant the agency explicit authority to intervene in the area of gambling. They call the proposal arbitrary and capricious. Jonathan Marcus, general counsel of CME Group, supports this view in a separate letter. He warns that the CFTC is wrongly classifying the sporting event itself as gaming instead of focusing on the financial hedging transactions.

Background

The current dispute was triggered, among other things, by a ruling in the case of KalshiEX LLC v. CFTC. A court in Washington D.C. ruled in September 2024 that betting on political elections does not fall under the CFTC's gaming ban. This opened the floodgates for further event contracts. The CFTC is now trying to regain its authority through a new regulation and to prohibit certain contracts that it considers to be against the public interest. The NFL has also called on the agency to take measures to protect the integrity of the sport.

"The proposed rule significantly exceeds the CFTC’s statutory authority and expands federal regulatory power into an area of major economic and political importance that the states have traditionally overseen." - Coalition of 44 Attorneys General, in their letter to the CFTC

Currently, the legal situation in the USA is a patchwork. While courts in Minnesota have temporarily stopped the state ban on prediction markets, there are contrary decisions or ongoing proceedings in Michigan and Nevada. Experts like Dan Boyle from the firm Boies Schiller Flexner expect that the dispute will ultimately end up before the Supreme Court, as the rulings of the various courts of appeal already contradict each other.

Why it matters for German players

For German users, these US debates about prediction markets have no direct legal impact, but they serve as a warning example of the importance of clear regulation. In Germany, the legal situation is clearly defined by the State Treaty on Gambling 2021 (GlüStV 2021). Sports betting and online casinos may only be operated by providers that are on the whitelist of the Joint Gambling Authority of the States (GGL). This strict supervision prevents exactly the uncertainties currently seen in the USA. German players benefit from fixed protection mechanisms, such as the cross-provider deposit limit of 1,000 euros per month, which is monitored via the LUGAS system. In addition, a stake limit of 1 euro per spin applies to virtual slot machines.

Anyone in Germany who plays with an unlicensed provider from overseas (e.g. Curacao or UKGC-only) enters a legal gray area and loses the protection of the GGL. The US conflict shows how important it is for an authority to have clearly defined competencies. In Germany, the GGL takes on this role, which creates legal certainty for everyone involved.

What it means for GGL-licensed casinos

German casinos with a GGL license can follow this dispute calmly, as their business model is firmly based on the GlüStV 2021. The clear separation between financial products and gambling is strictly regulated in this country by the GGL's license conditions. While there is now a dispute in the USA about whether a sports bet qualifies as a futures market contract, this is excluded in Germany. Licensed providers must ensure that their products are classified as sports betting or virtual slot games and fulfill all reporting obligations to the LUGAS system. This ensures fair competitive conditions for providers in the long term compared to unregulated black market providers, who often try to circumvent supervision by creatively naming their products.