Bipartisan Coalition of 41 Attorneys General Urge Prediction Markets Clarity

A bipartisan coalition created by 41 state attorneys general is pushing for a clear line over who controls sports-related prediction markets, arguing that states should retain full authority to regulate them.

States Should Keep Doing What They’re Doing

Iowa Attorney General Brenna Bird made the announcement at the start of the week, arguing that US states have been handling gambling within their borders for a long time and they should keep doing it without federal interference. 

Bird further added that state regulators and legislatures would be most suitable to enforce gambling laws while collecting taxes and protecting consumers from potential harm.

At the center of the debate are prediction markets, online platforms where users trade contracts based on the outcomes of real world events. 

Some of these platforms, including Polymarket and Kalshi, allow users to effectively bet on sports results, such as game winners, point spreads, and individual performance statistics.

Coalition Wants CFTC to Clarify Its Jusrisdiction

The coalition believes these products work similar to sports betting while operating outside traditional state gambling frameworks. 

Since they are structured as financial contracts rather than standard wagers, they are currently overseen by the Commodity Futures Trading Commission (CFTC) rather than state gaming regulators.

In a formal filing they sent to the CFTC, the attorneys general part of the coalition asked the agency to clarify through rulemaking that it does not have jurisdiction over sports-related contracts. 

They argue that allowing these platforms to operate without state oversight undermines existing gambling laws and weakens consumer protections.

Bird and her colleagues further raised concerns regarding the social impact of sports gambling, including common risks like addiction and financial instability, which, they believe, are better tackled by states than federal regulators. 

The coalition went on to reiterate that courts have already proven their support for state authority in similar disputes, explaining that prediction markets that are connected to sports outcomes should not be allowed to bypass local gambling laws or tax systems.

The letter comes as federal regulators review how to classify and regulate prediction markets, a fast growing segment of online trading that sits at the intersection of finance and gambling. 

The outcome of that decision could shape how these platforms operate across the country and determine whether states regain direct control over their regulation.