Senators press Commodity Futures Trading Commission over lax enforcement on sports betting contracts

A bipartisan group of U.S. lawmakers is demanding answers from the Commodity Futures Trading Commission (CFTC), accusing the federal agency of allowing event contracts that function as unregulated sports betting across state lines.

In a letter sent Monday to acting CFTC Chair Caroline Pham, six senators from five states raised concerns over platforms such as Kalshi and Robinhood offering “Yes” or “No” contracts on sporting events, including NFL, college football, and Major League Baseball games.

The lawmakers argue that such products fall under the definition of sports betting, which is legalized and regulated by individual states and tribal authorities, not the federal government.

“The CFTC is expressly prohibited from allowing event contracts that involve gaming, are unlawful under federal or state law, or are contrary to the public interest,” the letter states.

“Despite this prohibition, the CFTC is permitting sportsbook gaming to inappropriately designate themselves as ‘event contracts’ with oversight by the CFTC. For example, some companies are claiming to allow legal sports betting in all 50 states. This action – and the CFTC’s unwillingness to stop it – contradicts both the letter and the intent of the law.”

The senators warned the CFTC not to “sidestep statutory obligations by declining to enforce the prohibitions that Congress enacted.” They argue that such inaction undermines state and tribal regulatory authority and could lead to an unwanted federalization of gaming laws, which the U.S. Supreme Court has affirmed are under state control.

Among the signatories are Senators Catherine Cortez Masto (D-Nevada), John Curtis (R-Utah), Ruben Gallego (D-Arizona), Elissa Slotkin (D-Michigan), Alex Padilla (D-California), and Adam Schiff (D-California). The states represented span the regulatory spectrum: Nevada, Arizona, and Michigan allow regulated sports betting; California permits only tribal gaming and has increased enforcement against illegal operators; and Utah maintains a total prohibition on gambling.

The senators submitted 11 questions to the CFTC, requesting written responses by October 30. These include how the commission differentiates between sports betting and event contracts, whether prediction markets comply with integrity and consumer protection standards, and if they fall under the jurisdiction of the Federal Wire Act.

Kalshi, one of the companies named, has positioned itself as a federally regulated entity under the CFTC and has sued state regulators in efforts to continue offering its services nationwide. The senators say this status allows platforms to sidestep numerous state-level safeguards, including licensing, age restrictions, anti-money laundering protocols, and addiction-related consumer warnings.

“The continued availability of illegal sports event contracts in all 50 states further reaffirms the need for the CFTC to enforce its own regulations mandated by Congress,” the senators said.

“Moreover, by claiming to be federally regulated by the CFTC, issuers of sports event contracts can avoid myriad state laws, including licensing and background investigations, minimum age requirements, federal anti-money laundering rules, and consumer protections such as addiction warnings and integrity monitoring. These rigorous standards are required by state and tribal licensed entities, which the CFTC does not have the authority or the capacity to replicate.”

While the letter escalates congressional scrutiny of the CFTC’s oversight role, the commission has yet to address the legality of sports-related contracts directly. Although the CFTC recently held a joint roundtable with the Securities and Exchange Commission on derivative markets, the issue of sports betting contracts was not part of the discussion.

On the same day the letter was sent, the CFTC issued a separate advisory to market participants about preparing for potential disruptions during the ongoing U.S. government shutdown. The notice reminded futures commission merchants, introducing brokers, clearing organizations, and others of their regulatory obligations but did not establish any new requirements.

The advisory, issued by the CFTC’s Market Participants Division, Division of Clearing and Risk, and Division of Market Oversight, was described as “a reminder to be prepared for all foreseeable conditions that may result from facilitating trading and clearing of certain contract markets for customers, other market participants, and clearing members.”