41 State Attorneys General Just Told the CFTC to Back Off Sports Prediction Markets — Here’s What That Means for Bettors

A coalition of 41 state attorneys general sent a formal comment letter to the Commodity Futures Trading Commission on April 30, 2026, arguing that sports prediction contracts are nothing more than wagers — and therefore belong under state gambling law, not federal commodity oversight. The bipartisan group, co-led by attorneys general from New Jersey, Ohio, Nevada, New York, Tennessee, and Utah, represents the most coordinated state pushback against prediction markets to date, and it has real implications for anyone using platforms like Kalshi or Polymarket to bet on sports.

What the Letter Actually Says

The AGs filed their letter in response to a CFTC request for public comment on proposed rules for prediction markets. In it, they argue that “any distinction between sportsbook bets and prediction-market bets is illusory.” On platforms like Kalshi and Polymarket, users can wager on game winners, point spreads, and player statistics — the same bets available at any licensed sportsbook. The coalition contends that because these contracts function as entertainment-based gambling rather than tools for financial risk management, they fall outside the CFTC’s jurisdiction under the Commodity Exchange Act.

“The CFTC should recognize the limits of its power and affirm that states have the expertise, experience and tools to regulate sports betting as they have for more than a century,” the letter states. New Jersey AG Jennifer Davenport was direct: “Prediction markets have no right to offer sports gambling in New Jersey in violation of the bedrock rules that other wagering operations follow.”

The letter was signed by attorneys general from 40 states plus the District of Columbia. Notably absent were Florida, Missouri, Montana, Georgia, New Hampshire, North Dakota, Texas, Washington, West Virginia, and Wyoming — states whose AGs did not join the coalition. You can check how your state currently handles state-by-state sports betting regulations regardless of how this fight resolves.

The Court Battles Driving This Fight

The AG letter does not exist in a vacuum. It comes amid a rapidly expanding legal war between states and the CFTC — one that has already produced conflicting rulings at the federal district level.

On February 19, 2026, a federal court in Tennessee delivered a significant win for Kalshi. U.S. District Judge Aleta Trauger granted a preliminary injunction blocking the Tennessee Sports Wagering Council from enforcing its cease-and-desist order against the platform. The court found that Kalshi’s sports event contracts are likely “swaps” under the Commodity Exchange Act, and that federal law likely preempts Tennessee’s attempt to regulate them under the state’s Sports Gaming Act. If you follow Tennessee sports betting, this ruling directly affects what platforms are available to you in the state.

Then came April 6, when a Third Circuit panel issued a 2-1 ruling finding that New Jersey cannot regulate Kalshi through state gambling laws. The majority held that sports-related event contracts qualify as “swaps” under the CEA and that the CFTC holds exclusive jurisdiction over them. That ruling was a blow to the states — and it almost certainly accelerated the decision by 41 AGs to file their formal comment with the CFTC just weeks later.

Meanwhile, the CFTC has gone on offense. The agency has filed lawsuits against New York, Illinois, Connecticut, Arizona, and Wisconsin — all states that attempted to enforce gambling laws against prediction market platforms. In Arizona, a federal court recently granted an injunction shielding Kalshi from criminal prosecution, citing the Commodity Exchange Act’s “exclusive jurisdiction” language.

What This Means for Sports Bettors

If you have been using Kalshi, Polymarket, or similar platforms to bet on sports, the legal landscape right now is genuinely uncertain — and that uncertainty has direct consequences for your access. Courts are split. Some have sided with the states; others have sided with the platforms. Whether a sports prediction contract is available in your state depends less on what the law says than on what the most recent court ruling in that state says.

The states’ position, if it ultimately prevails, would mean that platforms like Kalshi and Polymarket would need to obtain state gaming licenses to offer sports contracts — just like traditional sportsbooks. That would likely result in those contracts disappearing in states where prediction markets are not licensed, similar to how traditional Florida sports betting remains unavailable because the state has not yet launched legal mobile wagering.

The CFTC, on the other hand, argues that it alone has the authority to regulate these products under federal law. CFTC Chair Michael Selig has been aggressive in staking out that position, saying the agency “will not allow overzealous state governments to undermine the agency’s longstanding authority over these markets.”

Why This Is Different From Prior State Actions

Individual states have been challenging prediction markets for months. What makes the April 30 letter significant is the scale and coordination. Forty-one attorneys general, spanning both red and blue states, agreeing on a legal position in a formal regulatory comment is a different kind of pressure than a single state filing a lawsuit. It signals that states are moving from reactive enforcement to proactive federal rulemaking strategy — trying to get the CFTC itself to acknowledge the limits of its jurisdiction before a court forces the issue.

Whether the CFTC will listen is another question. With four commission seats currently vacant and Chair Selig holding sole voting power, the agency has moved quickly to assert its authority, suing five states in recent weeks. The comment letter from 41 AGs goes into the public record, but it does not bind the CFTC to change course.

The most likely resolution is an appellate court — or ultimately the Supreme Court — drawing a definitive line between federal derivatives regulation and state gambling law. Until that happens, where you can bet on sports via a prediction market will keep changing, sometimes week to week, depending on what the nearest federal courthouse decides next.