The relationship between event contracts and insurance and the bearing of such a relationship on the public interest determination.
The Request seeks comment on several aspects of CFTC Regulation 40.11, which sets out standards and procedures for listing and approval of event contracts. The request for comment includes the scope of enumerated categories set out in CFTC Regulation 40.11 as being prohibited. In addition to other activities prohibited under state and federal law, this list specifically prohibits listing and clearing contracts or transactions relating to terrorism, assassination, war and gaming. In particular, the Request asks which sources should inform the definition of “gaming,” whether different types of contests should be distinguished for purposes of defining it, and which public interest or anti-manipulation considerations are specific to event contracts involving gaming. 29 These questions provide a sense of the regulatory concerns that the CFTC may seek to address in a future rulemaking. While the scope of any prohibitions on or exclusions from the category of permitted event contracts will likely be the subject to extensive comment and discussion, the single most significant obstacle to the creation of a federal regulatory framework for event contracts and prediction markets may be state laws which govern or regulate gambling. As we discuss below, the evolving federal regime for prediction markets appears set to collide with multiple state laws regulating gambling.
CFTC Asserts Exclusive Jurisdiction Over Event Contracts
Gaming and consumer protection authorities in various states have sought to prohibit DCMs from offering sports-related event contracts in their respective jurisdictions pursuant to state gambling laws and regulations. 30 In response, DCMs offering sports-related event contracts have filed their own lawsuits against various state regulators arguing that event contracts tied to sporting events
29 The Request also invites comment on procedural issues under CFTC Regulation 40.11, such as at what stage the CFTC may make a public interest determination, whether such a determination may apply to a category of event contracts rather than individual contracts, and how the 90-day time limit should shape the CFTC’s procedure, as well as broader classification questions, including how event contracts differ from swaps, options, and futures, what costs, benefits, and antitrust considerations should inform any regulatory amendments, and how such amendments would affect small entities under the Regulatory Flexibility Act. 30 See, e.g., State of Nevada v. KalshiEX, LLC , No. 2:26-cv-00406 (D. Nev. 2026) (Nevada Gaming Control Board arguing that event contracts tied to sporting events are wagering activity subject to gambling regulation); Illinois Gaming Board, Cease and Desist Letters Related to Unlicensed Sports Wagering Activity, available at https://igb.illinois.gov/sports-wagering/cease-and-desist-letters.html (last visited Mar. 17, 2026). Lawsuits have also been brought against DCMs that offer sports event contracts by tribal governments. See, e.g., Ho-Chunk Nation v. Kalshi Inc. et al ., No. 3:25-cv-698 (W.D. Wis. 2025) (tribal and state authorities seeking to enjoin alleged illegal sports betting activities by Kalshi on tribal lands and throughout the state). On March 16, 2026, Arizona filed criminal charges against KalshiEX LLC and Kalshi Trading LLC, the companies behind the Kalshi prediction markets platform, for operating an illegal gambling business in Arizona without a license as well as for election wagering. Arizona v. KalshiEX LLC , No. CR2026-000173-001 (Ariz. Super. Ct. Maricopa Cnty. 2026); Arizona v. KalshiEX LLC , No. CR2026- 000173-002 (Ariz. Super. Ct. Maricopa Cnty. 2026).
March 2026 / Page 11
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