CFTC Says Sports Prediction Markets Are Financial Products, Moves to Block Arizona

The Commodity Futures Trading Commission is seeking to stop Arizona from regulating prediction-market platform Kalshi.

CoinDesk reported on July 8 that the CFTC and the Justice Department asked a federal court on July 7 to halt Arizona’s enforcement of state gambling laws against Kalshi. The agencies argued that contracts on prediction-market platforms allowing bets on sports and election outcomes qualify as financial derivatives known as swaps, placing them under the CFTC’s jurisdiction.

Arizona, however, considers contracts tied to sports outcomes to be the same as traditional sports betting. The state argues that sports prediction-market contracts should be subject to the same rules that govern gambling products, including age restrictions and consumer protections. Arizona has also sued Kalshi over alleged violations of gambling laws.

At the center of the dispute is whether sports prediction-market contracts should be treated as financial products. If a federal court recognizes such contracts as financial instruments, platforms including Kalshi and Polymarket would come under the CFTC’s authority. CoinDesk said that if that interpretation is accepted, Kalshi would be subject to the Commodity Exchange Act, potentially limiting states’ ability to regulate or push prediction-market platforms out of their markets under gambling laws.