US Senators Bid to Stop CFTC Sports Prediction Market Suits

Jonathan Rodriguez

Written by: Jonathan Rodriguez

Published: Mon Jun 29, 2026, 8:00 am ET

Read Time: 3 minutes

US Senators Bid to Stop CFTC Sports Prediction Market Suits

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A coalition of Democratic US Senators is seeking to prevent the Commodity Futures Trading Commission (CFTC) from using taxpayer money to sue states over prediction market regulations.

The lawmakers argue that the federal agency has overstepped its authority by challenging states that are attempting to regulate or restrict sports-related prediction markets.

Their proposal comes as the legal battle over prediction markets continues to intensify. State regulators have increasingly argued that many sports event contracts resemble traditional sports betting. 

Meanwhile, the CFTC maintains that these products qualify as federally regulated derivatives under the Commodity Exchange Act. 

The dispute has created growing uncertainty for prediction market operators, state gaming regulators, and the wider USA gambling industry, including US online sportsbooks.

Key Democratic US Senators Want to Defund the CFTC's Litigation Efforts

Senators Adam Schiff (D-CA), Alex Padilla (D-CA), Richard Blumenthal (D-Conn.), Jeff Merkley (D-Ore.), and 13 other Democratic senators have urged the Senate Appropriations Subcommittee on Financial Services and General Government to limit the CFTC's litigation budget.

Specifically, the lawmakers want Congress to prohibit the agency from spending federal funds on lawsuits against states and Tribal governments that regulate or prohibit prediction markets.

The senators argue the CFTC is overstepping its role by defending prediction market operators against state enforcement actions. They believe this approach weakens state authority over gambling regulation and consumer protection.

In their letter, the senators wrote:

"Through engaging in this campaign of litigation and intimidation, the CFTC risks becoming an instrument and enabler of online prediction markets' efforts to bypass states' consumer protections and oversight, creating a race-to-the-bottom in gambling,"

The lawmakers also argued that taxpayers should not finance lawsuits that undermine states' longstanding authority over gambling regulation. Instead, they believe the agency should focus on its core responsibilities of overseeing derivatives markets while respecting state gaming laws.

CFTC Expands Legal Fight Against States

The funding proposal follows an aggressive legal campaign by the CFTC against states attempting to regulate or ban prediction markets.

The agency has recently sued Kentucky, Arizona, Connecticut, Illinois, New York, and Rhode Island after those jurisdictions challenged federally regulated prediction market operators. 

The lawsuits seek to block state enforcement actions by arguing that the Commodity Exchange Act gives the CFTC exclusive authority over these contracts.

State regulators disagree with that interpretation. They argue that sports event contracts closely resemble traditional sports wagering. This is due to participants risking money on sporting outcomes for financial gain.

As a result, several states have attempted to restrict or prohibit these markets under their existing gambling laws. Those efforts have placed the CFTC and state regulators on opposing sides of an increasingly significant legal battle.

The conflict also places prediction market operators alongside the federal regulator. Meanwhile, many state gaming agencies continue to insist that gambling oversight remains their responsibility.

Legal Battle Could Shape the Future of Prediction Markets

The proposed appropriations language would not immediately end the CFTC's ongoing lawsuits. However, it could significantly reduce the agency's ability to file new cases or continue existing litigation if Congress approves the measure.

The broader dispute carries major implications for prediction markets and the evolving USA gambling landscape. A ruling favoring the CFTC could strengthen federal oversight while limiting states' ability to regulate sports event contracts. 

Conversely, victories for state regulators could reinforce state authority over gambling products that resemble sports betting.

The outcome could also influence competition between prediction markets and US online sportsbooks. Sportsbooks operate under state licensing systems and comply with state consumer protection requirements. Prediction market operators, however, argue that federal oversight provides a separate regulatory framework.

Until courts and lawmakers provide greater clarity, both regulators and operators will continue navigating an uncertain legal environment. 

Jonathan Rodriguez
Jonathan Rodriguez

Jonathan is an avid basketball fan, and is often looking forward to the next upcoming NBA season when not checking players' stats during games. He also likes to keep his ears on the ground for the latest rumblings in the online casino industry.

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