Ohio AG Leads 41-State Push Against Federal Oversight of Sports Prediction Markets

Ohio Attorney General Dave Yost has led a 41-state coalition urging the Commodity Futures Trading Commission (CFTC) to affirm that sports-related event contracts fall under state gambling authority, not federal commodities regulation. 

The bipartisan group filed a formal comment with the CFTC, arguing that prediction markets such as Kalshi and Polymarket, had become comparable to unregulated sportsbooks. The attorneys general said users could place the same types of sports wagers available through traditional betting operators (our best prediction markets) despite the products being framed as event contracts.

Yost said the activity amounted to gambling and should remain under state jurisdiction. He said states had a longstanding responsibility to protect residents from gambling-related harms. 

“This is gambling, no matter how they try to dress it up, and that means it belongs under state jurisdiction,” Yost said. “States have a longstanding right and responsibility to protect their citizens from the dangers of gambling, whether it’s on a prediction market or a casino floor.” 

The coalition also argued that the contracts were entertainment-based gambling products rather than financial instruments used for risk management. On that basis, the attorneys general said the CFTC could not regulate the apps as commodity markets. 

The group added that sports gambling posed risks to public health and financial security. It argued that states were better equipped than the CFTC to oversee the activity because they had existing gambling laws, enforcement experience, and consumer protection frameworks. 

In its filing, the coalition urged the CFTC to recognize the limits of its authority and affirm that states have the tools and experience to regulate sports betting. 

CFTC Sues Wisconsin Over Prediction Market Crackdown 

The dispute over who gets to regulate what, essentially, has also moved into federal court. At the end of April, the CFTC sued Wisconsin and state officials after the state took action against prediction market operators.  

The agency argued that it had exclusive jurisdiction over prediction market platforms such as Kalshi and Polymarket and that state enforcement efforts interfered with federal financial market regulation. 

The Wisconsin case followed the state's lawsuit against Coinbase, Kalshi, Robinhood, Polymarket, and Crypto.com. Wisconsin alleged that the companies were operating illegal sports betting products. 

Wisconsin became the fifth state to face a CFTC lawsuit over prediction-market enforcement. CFTC Chair Michael Selig said states could not bypass Congress's directive and warned that the agency would sue states that interfered with federal regulation of financial markets. 

Wisconsin Attorney General Josh Kaul rejected the agency's position. He said unlawful conduct did not become legal because it was described differently. He also cited wider bipartisan opposition from attorneys general in related cases, describing the federal position as an effort to limit states' ability to protect residents. 

Selig moved quickly on the issue after becoming CFTC Chair. In early April, the agency sued Arizona, Connecticut and Illinois over state efforts to restrict prediction markets. It later sued New York, days after that state accused Coinbase and Gemini of violating gambling laws.