Senators Press CFTC on Prediction Market Oversight

A bipartisan group of U.S. senators has pressed the Commodity Futures Trading Commission (CFTC) on why it has not enforced restrictions against prediction markets offering sports-related contracts. Lawmakers argue platforms such as Kalshi and Robinhood are bypassing state laws by framing wagers as federally regulated event contracts.

Good to Know

• Senators from five states signed the letter to acting chair Caroline Pham.
• The group says sports betting is regulated at the state and tribal level, not federal.
• They want answers by October 30 on how the CFTC handles event contracts.

In their letter, the senators pointed to federal rules that bar event contracts tied to gambling or those unlawful under state law. They said the CFTC is allowing companies to brand sports betting as event contracts and operate across all states, undermining state and tribal oversight. The lawmakers wrote.

“The continued availability of illegal sport event contracts in all 50 states further reaffirms the need for the CFTC to enforce its own regulations mandated by Congress.” 

Kalshi has defended its stance, saying it is federally regulated and has challenged state regulators in court. The senators argue that such claims let prediction platforms bypass requirements like licensing, age checks, anti-money laundering rules, and responsible gambling standards that apply to state-approved operators.

Those who signed include Catherine Cortez Masto (D-Nevada), John Curtis (R-Utah), Ruben Gallego (D-Arizona), Elissa Slotkin (D-Michigan), Alex Padilla (D-California), and Adam Schiff (D-California). Nevada, Arizona, and Michigan all allow legal sports betting, while California has tribal-run gaming and Utah bans gambling entirely.

The lawmakers sent 11 questions to Pham, covering how the CFTC views sports betting, whether platforms follow integrity rules, and if contracts comply with the Federal Wire Act. The response deadline is October 30.

While the CFTC recently joined the Securities and Exchange Commission for a joint roundtable on derivative markets, sports wagering contracts were not discussed. On the same day, the CFTC issued an advisory reminding market participants to prepare for potential disruption during a government funding lapse, clarifying that the notice did not create new obligations.

In related news, The White House has officially pulled back the nomination of Brian Quintenz as new CFTC chair.