The Coalition for Prediction Markets Just Asked the CFTC to Redefine “Gaming” — Here’s Why It Matters

On May 1, 2026 — the final day of the CFTC’s 45-day public comment window on prediction market regulation — the Coalition for Prediction Markets filed a formal letter with federal regulators asking for something that sounds simple but carries enormous legal weight: a clear, narrow definition of the word “gaming.” With more than 1,400 comments submitted during the comment period, the CPM letter stands out as one of the most direct attempts by the industry to shape how regulators draw the line between futures markets and gambling.

Who Is the Coalition for Prediction Markets?

The CPM is a consortium of major players in the event contract and financial technology space. Its current members include Coinbase, Crypto.com, Kalshi, Robinhood, and Underdog. Together, these companies represent a significant share of the infrastructure behind legal prediction markets in the United States. The letter was addressed to Christopher Kirkpatrick, Secretary of the CFTC, and lays out a clear legal argument for why the agency should formally define its own regulatory language before that ambiguity is used against the industry.

The Word at the Center of It All

Current CFTC rules prohibit contracts related to “terrorism, assassination, war, gaming, or an activity that is unlawful under any State or Federal law” — along with similar activities the agency deems contrary to public interest. The word “gaming” is not defined in those rules, and that gap is precisely what the CPM is trying to close.

The coalition argues that “gaming” should be interpreted narrowly — covering only casino-style games like slots and table games — and should not be applied to sports-related event contracts or prediction markets more broadly. As the letter states directly: “The Coalition supports a formal rule defining gaming to cover the casino-style games traditionally regulated by states. This will make clear the difference between event contracts traded on designated contract markets.”

The distinction the CPM draws is economic. Casino wagers, in their view, create no value beyond the wager itself. Event contracts are different. In the coalition’s words: “Event contracts on DCMs are tied to real-world events associated with a potential financial, economic, or commercial consequence. Wagers on casino games have no economic significance apart from the wager itself.”

Why This Is Urgent Now

The timing of the letter is no accident. The legal landscape for prediction markets has been shifting rapidly, and the definition of “gaming” has become a live question in federal courts. A panel of Ninth Circuit judges recently questioned whether “casino gaming” could be interpreted to include sports betting — noting, pointedly, that you “go to a casino to make a bet.” That kind of reasoning, if adopted by courts or regulators, could sweep prediction markets into a prohibited category under existing CFTC rules.

The regulatory backdrop has also been in flux. On February 6, 2026, the CFTC withdrew its prior proposed rules on event contracts, a move widely interpreted as potentially favorable to the prediction market industry. Then, on March 11, 2026, the agency issued an Advance Notice of Proposed Rulemaking seeking public input on how to regulate event contracts going forward. The following day, CFTC Staff Advisory 26-08 provided guidance for designated contract markets listing event contracts. The CPM letter is a direct response to that rulemaking process, submitted at the deadline.

For bettors and users of platforms like Kalshi, these regulatory questions are not abstract. They determine whether the contracts you can trade today remain legal tomorrow, and under whose authority they fall. Readers following the state-by-state sports betting landscape will recognize that the overlap between prediction markets and traditional sportsbooks is exactly what makes this fight so contested.

The Opposition: 41 State Attorneys General Push Back

Not everyone agrees that the CFTC should be setting the rules here. A bipartisan coalition of 41 state attorneys general filed a competing comment during the same period, arguing that states — not federal regulators — should have jurisdiction over sports-related event contracts. The coalition is co-led by Ohio Attorney General Dave Yost, along with the AGs of Nevada, New Jersey, New York, Tennessee, and Utah.

Their position is blunt. As the AGs put it: “This is gambling, no matter how they try to dress it up — and that means it belongs under state jurisdiction.” The coalition argues that platforms like Kalshi and Polymarket are offering the same types of wagers available at licensed sportsbooks — spreads, player statistics, game winners — but without the consumer protections and tax requirements that come with state regulation.

This is the core tension. Prediction market platforms operate under CFTC oversight as designated contract markets, which means they are not subject to the same state-level licensing and compliance frameworks that govern traditional sportsbooks. If the CFTC narrows its definition of “gaming” and affirms its own jurisdiction over event contracts, state regulators lose the ability to bring these platforms under their existing sports betting frameworks — and the revenue and consumer protection structures that come with them.

Where the CFTC Stands

The CFTC has signaled that it leans toward the narrow, casino-only definition of gaming — the same outcome the CPM is advocating for. If the agency adopts that position formally in its rulemaking, it would represent a significant victory for prediction market platforms and a defeat for the state attorneys general trying to bring them under state gambling authority.

That said, the public comment process is just the beginning. The CFTC will now review the more than 1,400 submissions it received and move toward a formal rule. How it defines “gaming” will determine not just the legal standing of current prediction market operators, but the competitive landscape for anyone betting on real-world events — whether through a traditional sportsbook, a platform like Kalshi, or something that does not yet exist.

For anyone who follows sports betting closely, this regulatory fight is worth watching. The definition of a single word inside a federal rulebook could reshape who gets to offer event-based contracts, who regulates them, and who pays taxes on the proceeds.