Hopes that a federal agency would soon publicly clarify the legal status of sports event contracts offered by prediction markets have suddenly gone up in smoke.
Key Insights
- The CFTC has canceled a prediction market roundtable that was expected to provide clarity about federally regulated sports event contracts.
- The cancelation leaves questions unanswered about those contracts, which are being challenged by state gaming regulators.
- Kalshi, a prediction market operator that offers those contracts, has pushed back against those sports betting regulators in court.
The U.S. Commodity Futures Trading Commission (CFTC) announced in February that it would hold a public roundtable to help inform the federal regulator’s approach to overseeing so-called prediction markets, including their controversial sports event contracts.
More than two dozen interested parties provided feedback to the CFTC ahead of the roundtable, which was expected to happen on April 30.
However, as first reported by gambling industry consultant Dustin Gouker, the roundtable has been called off. The CFTC did not respond to questions from Covers before this story was published.
Still, it's a decision that will create further uncertainty. The roundtable was being counted on to provide clarity about the CFTC’s position on sports event contracts, which are being challenged by state sports betting regulators and fought over in the courts.
"Before the Commission allows sports betting in all 50 states, I hope they listen to the feedback presented at this roundtable and consider the harm that contracts on sports event would have on the legal gaming ecosystem that provides tax revenue, responsible gaming resources, integrity monitoring, and consumer protection," Nevada Congresswoman Dina Titus wrote to the CFTC in February.
Now, though, any additional clarity will have to wait. That leaves a fairly big question mark hanging over the legal status of sports event contracts.
Unclearing things up
It's also not the first time that stakeholders and the public have been left without further CFTC clarity on sports event contracts.
The regulator announced in January it would review two sports event contracts that Crypto.com had "self-certified" in mid-December. However, Crypto withdrew those two contracts on Feb. 3 after self-certifying a newer version on Jan. 30.
The newer contract has not been reviewed by the CFTC (which is now under new leadership and operating under a new president, whose son announced in January he was advising a prediction market).
Moreover, a person familiar with the company said the sports contracts trading on Crypto.com’s CFTC-regulated exchange now fall under the more recently self-certified products.
Somebody do something
For now, then, sports event contracts are legal and available until they aren’t. Prediction markets operated by Kalshi, Robinhood, and Crypto.com are up and running in all 50 U.S. states.
The event contracts offered by those sites make it possible for users to make de facto sports wagers, such as by buying a “yes” contract in the Dallas Stars defeating the Colorado Avalanche in their NHL playoff series.
This puts prediction markets in direct competition with state-regulated sportsbooks such as DraftKings and FanDuel. It also puts them at odds with state lawmakers and gaming regulators that have decided (or not) on authorizing sports betting and the rules under which it should be offered.
Some of those regulators want trading of the sports event contracts stopped.
“We believe that these sports event contracts are Wagers under the [Tennessee Sports Gaming Act] and are being offered in violation of Tennessee law and regulations," wrote Mary Beth Thomas, the executive director of the Tennessee Sports Wagering Council, in a letter to the CFTC earlier this month. “The sports event contracts give consumers the option to purchase contracts corresponding to one of two outcomes of an event. In a sporting event context, a consumer is purchasing a contract that reflects which team they believe will win or lose the matchup. The ultimate result is money being won or lost based on the outcome of a game.”
A handful of states (albeit not Tennessee) have hit Kalshi, Robinhood, and Crypto.com with cease-and-desist letters over what local regulators view as unauthorized sports betting. Kalshi has pushed back with lawsuits in Nevada, New Jersey, and Maryland. Ohio regulators expect to face a similar legal challenge.
Kalshi’s position in these lawsuits could be summed up as “the CFTC is in charge here and the CFTC hasn’t told us to stop.”
Thus far, that line of argument has been successful for Kalshi, which also won a key decision last year in court that allowed it to offer wagering on the U.S. presidential election.
"To the extent the States or other interested parties object to Kalshi offering sports and election event contracts, they must take that up with the [Commodity Futures Trading Commission] and Congress," a federal judge in Nevada wrote earlier this month. "Such policy issues are beyond the jurisdiction of this court."
Already out there, but here's the kicker of the U.S. District Court for Nevada's decision to grant Kalshi a preliminary injunction against local regulators seeking to shutter the prediction market.
— Geoff Zochodne (@GeoffZochodne) April 10, 2025
tl;dr: Issues with sports and election contracts? Take it up with the feds. pic.twitter.com/iSg9DzcOXI
Kalshi’s lawsuits are still pending, leaving another legal cloud over sports event contracts. A final resolution through the courts could also take a long time.
The CFTC hasn’t ordered a halt to trading in sports event contracts and now the roundtable planned to clarify the regulator’s thinking has been scrapped. That means even supporters of sports event contracts will lack a firmer stance from the agency.
It also means sportsbook operators such as DraftKings (which has hinted it is interested in running a prediction market of its own) lack the certainty to take the plunge.
“The signs are pointing to a positive ruling, in our view, and in that event the legality of prediction markets will pave the way for sports betting companies to build an offering and launch in the vertical,” Citizens analyst Jordan Bender wrote in a note to clients earlier this month on the now-scrapped CFTC roundtable.
