The NTRA Says Prediction Markets Can’t Offer Kentucky Derby Bets — The CFTC May Decide If They’re Right

Horse racing has its own federal law. It has had one since 1978. And now the National Thoroughbred Racing Association is using that law to argue that prediction market platforms have no business offering Kentucky Derby contracts — and that the CFTC, which wants to let them, is overstepping its authority. This dispute is heading toward a collision just weeks before the Run for the Roses.

What the NTRA Is Arguing

NTRA CEO Tom Rooney sent a letter to the CFTC chairman on April 2, 2026, making the racing industry’s position crystal clear. The core argument is straightforward: horse racing in the United States is governed by the Interstate Horseracing Act of 1978, a federal statute that established the legal framework for pari-mutuel wagering and the interstate commingling of race pools. The IHA gives horse racing a distinct regulatory structure, and the NTRA argues that any wagering activity on horse racing — including event contracts offered by prediction market platforms — falls under that framework, not under the Commodity Exchange Act that gives the CFTC its jurisdiction.

Put simply, Rooney and the NTRA are saying: you do not have jurisdiction here. Horse racing has its own law. If Kalshi or any other CFTC-regulated prediction market wants to offer contracts on who wins the Kentucky Derby, they would need to comply with the IHA and the broader pari-mutuel regulatory system — which would effectively make those products illegal in their current form, since prediction market contracts are structured nothing like traditional pari-mutuel wagering.

The CFTC’s Position

The CFTC under its current leadership has been aggressively defending its claimed exclusive jurisdiction over prediction markets, including sports event contracts. The agency went so far as to sue Connecticut and two other states that attempted to apply state gambling regulations to prediction market platforms operating within their borders. The CFTC’s position is that event contracts on federally regulated exchanges are commodity contracts under the CEA, full stop, and that states and other regulatory bodies cannot override that framework.

The racing industry’s challenge to that position is the most significant federal-to-federal jurisdictional confrontation the prediction market boom has produced so far. This is not a state trying to enforce state gambling law against a federally regulated exchange. This is an established federal regulatory framework — the IHA — being invoked against a different federal regulatory framework — the CEA. Both frameworks are federal law. One of them, presumably, has to yield.

Why It Matters for the Derby

The Kentucky Derby runs in early May. The timing of Rooney’s letter was deliberate. Prediction market platforms have been eyeing horse racing as a natural expansion market, and a Derby futures contract would be one of the most commercially attractive events they could offer. If the CFTC signals — before the Derby — that it views horse racing event contracts as within its jurisdiction, prediction markets could move quickly to list Derby winner contracts. The NTRA is trying to get ahead of that by forcing the CFTC to formally address the IHA question before that happens.

The stakes for the racing industry go well beyond one race. Horse racing’s pari-mutuel system is how tracks generate revenue and how states generate tax receipts from wagering. The entire financial model of American horse racing depends on the integrity and exclusivity of that pari-mutuel pool. If prediction markets can offer parallel wagering on race outcomes outside the pari-mutuel system — without sending any revenue to tracks, horsemen, or state racing commissions — the economic impact on an industry that is already under financial pressure could be severe.

Two Federal Regimes, One Collision Course

What makes this dispute genuinely interesting from a legal standpoint is that neither the NTRA nor the CFTC is wrong about the law as they each understand it. The IHA does give horse racing a specific federal framework. The CEA does give the CFTC jurisdiction over commodity contracts traded on designated contract markets. The question of which law takes precedence in this specific context has never been formally adjudicated, because prediction markets at this scale did not exist when either statute was written.

The CFTC has several options for responding to Rooney’s letter. It can issue a formal legal opinion asserting CEA jurisdiction over horse racing event contracts. It can punt to Congress and ask for legislative clarification. It can open a rulemaking proceeding. Or it can simply let the legal ambiguity sit, which effectively gives prediction markets a green light to move forward while the racing industry tries to challenge them in court.

None of those outcomes are quick. The Derby is weeks away. Depending on how fast the CFTC responds — and how explicit that response is — we could see prediction market platforms launch Derby contracts while this regulatory question is still unresolved, forcing the issue into litigation rather than formal guidance. That would be messy for everyone involved, which is exactly why the NTRA moved when it did.