The Commodity Futures Trading Commission (CFTC) is considering a proposed framework for determining whether certain event contracts are contrary to the public interest. The proposal could shape the future scope of federally regulated prediction markets by establishing how the CFTC determines whether event contracts, including sports-related contracts, are permissible under the Commodity Exchange Act. While prediction market exchanges themselves argue that event contracts are financial derivatives that aggregate information, improve price discovery, and allow businesses to hedge real economic risks, others view sports event contracts as functionally sports wagers with associated economic and social effects.
The outcome could also affect state budgets. If sports wagering shifts from state-regulated sportsbooks to federally regulated prediction markets, states could lose gambling tax revenue that currently supports education, youth programs, problem gambling services, and other public priorities.
To shed light on these potential state fiscal consequences, I recently submitted a public comment to the CFTC. My comment was one of nearly 1,400 others from state attorneys general, Tribal governments, sports leagues, gaming operators, financial institutions, technology companies, academics, consumer advocates, and members of the public.
To make this extensive public record, representing an unusually diverse group of stakeholders, easier to examine, I compiled all publicly available comments into a searchable Excel file. I used AI to download, organize, and analyze the comments, including identifying recurring themes across the submissions. Several consistent arguments emerge.
Forty-four attorneys general deliver one message
A joint comment submitted by Ohio Attorney General Dave Yost and signed by the attorneys general of 43 other states represents one of the most significant filings in the rulemaking. The bipartisan coalition argues that Congress never authorized the CFTC to permit or oversee what could become a nationwide sports-betting market operating under federal commodities law and that the proposed rule would dramatically expand federal authority into an area historically regulated by the states.
Their letter emphasizes state sovereignty over gambling, consumer protection, and the preservation of state regulatory systems, arguing that sports betting is gambling—not a financial derivative—and therefore falls outside the CFTC's jurisdiction under the Commodity Exchange Act. It further contends that the proposal would improperly preempt state gambling laws, exceed the CFTC’s statutory authority, and raise significant administrative law and constitutional concerns.
Tribal governments defend sovereignty
The docket also includes comments from approximately 60 Tribal governments, Tribal gaming commissions, Tribal gaming associations, and Tribal enterprises. While their individual submissions vary, they consistently frame the debate as a question of Tribal sovereignty, not merely gaming policy.
Tribal commenters argue that federally regulated sports contracts could bypass the framework established by the Indian Gaming Regulatory Act and undermine Tribal-state compacts, including negotiated exclusivity provisions. They note that Tribal gaming revenues often support healthcare, education, housing, infrastructure, public safety, and other governmental services.
Together, the Tribal submissions and the joint letter from 44 state attorneys general reflect a broader concern that the proposal could transfer authority over sports wagering from state and Tribal governments to a federal financial regulator.
Sports organizations seek to protect their interests
Sports organizations largely occupy a middle ground. Rather than arguing that sports prediction markets should be prohibited altogether, organizations including the National Collegiate Athletic Association, ATP Tour, International Tennis Integrity Agency, National Basketball Association, Major League Baseball, and Major League Soccer argue that, if these markets are permitted, they should be subject to safeguards comparable to those governing regulated sports betting. They call for information-sharing with leagues, prohibitions on trading by athletes and other insiders, stronger customer verification, and a meaningful role for sports governing bodies in reviewing high-risk markets.
The Players' Associations comment shifts the focus to athlete welfare. The associations call for protections for athletes' medical information, restrictions on contracts involving injuries and other "negative outcomes," measures to address betting-related harassment, and due process protections when athletes become the subject of integrity investigations.
Gaming groups and regulators see sports contracts as sports betting
The American Gaming Association, casino operators, sportsbooks, lotteries, and state gaming regulators generally argue that federally regulated exchanges should not be allowed to offer nationwide sports wagering without the licensing, taxation, geolocation, responsible-gaming, age-verification, anti-money-laundering, and integrity controls imposed by state and Tribal systems.
What’s really at stake
The CFTC's decision will shape not only the future of event contracts, but also the evolving boundary between financial innovation and gambling, and the respective roles of federal regulators, states, and Tribal governments in drawing that line. It could also determine whether states and Tribes retain authority over sports wagering and the tax and gambling revenue it generates.
