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New Jersey Attorney General Jennifer Davenport has joined 43 other state attorneys general, led by Ohio Attorney General Andy Wilson, in asking the Commodity Futures Trading Commission (CFTC) to rewrite its proposed prediction-market rule.
In a July 27 comment letter, the coalition argued that sports event contracts should remain subject to state gambling oversight rather than being regulated solely as federal derivatives.
The attorneys general say the federal approach could allow platforms to offer products resembling regulated New Jersey sportsbooks without proper licensing, minimum-age and responsible-gambling requirements.
The proposal remains under review, and the CFTC has not made a final decision.
AGs warn New Jersey protections could be bypassed
New Jersey requires regulated operators to obtain state licenses, verify that customers are at least 21 and display information about problem-gambling resources. Operators must also report suspicious wagering activity, while state law prohibits wagers on college events held in NJ or involving NJ college teams.
New Jersey bars athletes, coaches, referees and other sports insiders from wagering on events connected to their leagues or teams. The state’s self-exclusion program allows people to block themselves from New Jersey online casinos and sports wagering.
The letter says the proposal does not explain how those safeguards would apply if prediction markets are regulated exclusively at the federal level.
Why the age gap matters
The AGs’ letter cites Kalshi’s member agreement as allowing customers to participate at 18, three years before they can legally use a New Jersey operator.
The coalition also points to a 2023 Rutgers University study that found nearly one in five New Jersey respondents ages 18 to 24 were at high risk of a gambling problem. They say the finding shows the difference between an 18+ prediction market and a 21+ operator carries real consumer-protection consequences.
How the CFTC proposal would treat sports contracts
The CFTC proposal would move away from the current broad restriction on gaming-related event contracts and review products individually. The agency would consider economic or informational value, manipulation and insider-trading risks, settlement terms and the exchange’s ability to monitor trading.
Once a review begins, the CFTC would generally have 90 days to complete it.
Contracts based on player injuries, officiating decisions or individual in-game actions would raise greater concerns. Those tied to final scores, win-loss results, point differentials or season-long performance would be less likely to be rejected if they use objective settlement criteria and appropriate safeguards.
A contract that an exchange certifies as compliant with federal rules could continue trading during the review. The CFTC could request a suspension, but the exchange would not have to agree. If the agency later rejected it, trading would have to stop.
The proposal would define “gaming” as the underlying game rather than the act of wagering. The attorneys general reject that distinction, writing that “gaming means gambling.” They argue the narrower definition could allow regulated-style contracts to trade on CFTC-registered exchanges.
States challenge CFTC authority
The states contend that sports event contracts are wagers rather than financial derivatives and that Congress never authorized the CFTC to regulate gambling nationwide. They argue that if federal law grants the agency that power, it provides too little guidance on how the CFTC should use it.
The letter says the proposal would reverse 15 years of CFTC policy restricting gaming-related event contracts without weighing how states, consumers and licensed operators have relied on the existing system.
The challenge comes as New Jersey lawmakers consider S4447 and A5336, companion measures addressing how prediction markets would be regulated and taxed in the state.
Neither bill has advanced to a floor vote yet.
