WASHINGTON – U.S. Senator John Hickenlooper and 17 of his Senate colleagues called on the Senate Appropriations Subcommittee on Financial Services and General Government to prohibit the Commodity Futures Trading Commission (CFTC) from using federal funding to prevent states and Tribes from enforcing their gambling laws and gaming compacts with respect to prediction markets.
“Recent lawsuits filed by the CFTC against states regulating online prediction markets will only fuel a gambling public health crisis and interfere with states’ and Tribes’ longstanding prerogative to regulate or even restrict gambling,” the senators wrote.
The senators continued: “States and Tribes, in their longstanding capacity as the primary regulators of gambling, have brought legal action or are considering new laws, rightfully identifying that online prediction markets offer services that are no different than gambling. However, these efforts have been stymied by the CFTC, which is attempting to assert exclusive jurisdiction over online prediction markets by suing those states that are enforcing their laws. To date, the CFTC has sued Connecticut, Illinois, Arizona, Wisconsin, New York, Minnesota, Rhode Island, and New Mexico.”
“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 senators concluded.
States like Colorado have set commonsense regulations on sportsbooks and gambling entities to protect youth and consumers. However, prediction markets fall under CFTC’s purview, allowing prediction markets to circumvent state regulations.
During a Senate hearing last month, Hickenlooper pressed prediction market representatives on the lack of CFTC oversight, their attempts to bypass state regulations on gambling, and the potential risks unregulated prediction markets pose to minors and individuals struggling with gambling addiction. Hickenlooper introduced the Banning Event Trading on Sensitive Operations and Federal Functions (BETS OFF) Act, to ban wagering on government actions, terrorism, war, assassination, and events where an individual knows or controls the outcome.
Earlier this month, Hickenlooper called on the CFTC to strengthen oversight on prediction markets to reduce the potential for consumer harm, insider trading, and market manipulation. Hickenlooper also sent a letter to the CFTC to prohibit prediction markets from allowing margin trading in connection with event contracts, particularly for retail lending. In March, Hickenlooper and Reed called on the CFTC to prohibit gambling contracts on events tied to U.S. military operations after reports of users on Polymarket profiting off the timing of U.S. strikes in Iran and the death of Iranian Ayatollah, Ali Khamenei. Hickenlooper previously demanded the Trump administration provide a plan to combat manipulation and fraud in prediction markets.
The full text of the letter can be viewed here and below:
Dear Chair Hagerty and Ranking Member Reed,
We write to urge you to prohibit the Commodity Futures Trading Commission (CFTC) from using federal funding to prevent states and Tribes from enforcing their gambling laws and gaming compacts with respect to online prediction markets. Recent lawsuits filed by the CFTC against states regulating online prediction markets will only fuel a gambling public health crisis and interfere with states’ and Tribes’ longstanding prerogative to regulate or even restrict gambling.
Online prediction markets, which have rapidly grown in popularity, are drastically different from the original intent of event contracts, which those companies claim to offer. Serving to hedge against financial risks, event contracts were largely limited to the agricultural sector and economic matters. Prediction markets, however, have distorted this purpose and infiltrated the world of sports, politics, and even foreign affairs. It can be hardly argued that wagers, like betting over the Super Bowl, serve the same hedging function as traditional event contracts. Further, as prediction markets have sought to circumvent state safeguards, their products have led to underage gambling, gambling addiction, and serious financial losses.
States and Tribes, in their longstanding capacity as the primary regulators of gambling, have brought legal action or are considering new laws, rightfully identifying that online prediction markets offer services that are no different than gambling. However, these efforts have been stymied by the CFTC, which is attempting to assert exclusive jurisdiction over online prediction markets by suing those states that are enforcing their laws. To date, the CFTC has sued Connecticut, Illinois, Arizona, Wisconsin, New York, Minnesota, Rhode Island, and New Mexico. Further, the CFTC sought to block Arizona from enforcing its criminal and gambling laws against online prediction markets.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.
As leaders of the Financial Services and General Government (FSGG) Appropriations Subcommittee, which exercises jurisdiction over the CFTC, you serve as an important check against abuses of the CFTC’s regulatory authority. Given the significant societal consequences resulting from the CFTC’s interference in state gambling laws, we encourage you to prohibit the CFTC in the Fiscal Year 2027 FSGG Appropriations Act from using its appropriated funds to sue states and Tribes to stop them from enforcing their gambling laws or gaming compacts with respect to online prediction markets.
Thank you for your attention to this matter.
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