A coalition of 44 state attorneys general wrote to the Commodity Futures Trading Commission (CFTC) arguing that the agency lacks the authority to regulate sports-related event contracts on prediction market platforms.
The letter was sent as the public comment period for the CFTC's first proposed rule on prediction market regulation expired.
"The Proposed Rule goes beyond the CFTC's statutory powers, is in tension with the Constitution, and would otherwise be arbitrary and capricious in its current form," the attorneys general wrote.
They argue that sports bets and gambling should be regulated at the state level.
The CFTC and prediction market platforms argue that all event contracts are swaps, which are regulated by the CFTC.
However, states believe that sports-related contracts closely resemble sports betting, which falls under their jurisdiction.
Meanwhile, the CFTC is in litigation with nine states to defend its jurisdiction.
