Idaho has become part of a coalition consisting of 39 U.S. states contesting an alleged overreach by the Commodity Futures Trading Commission (CFTC) in regulating sports betting activities. This legal action, announced on Monday by Idaho Attorney General Raul Labrador, seeks to prevent the CFTC from asserting exclusive control over certain sports gambling practices, which the states argue should remain under their jurisdiction. The case underscores ongoing disputes regarding the CFTC’s role in prediction markets and event contracts, stirring debate about federal versus state regulatory powers.
The core of the controversy involves the CFTC’s stance, which, according to the coalition, potentially undermines the ability of states to regulate or ban sports betting independently. Attorney General Labrador expressed concerns that the CFTC aims to use interpretations of existing financial legislation to exert control over state-regulated gambling activities. According to Labrador, Idaho, among other states, risks losing its authority to enforce its sports betting prohibitions under this federal preemption theory.
The dispute has reached the Ninth Circuit Court of Appeals, following a lawsuit initiated by Nevada against platforms such as Kalshi, which offer prediction market services. The CFTC has backed the platforms, asserting federal jurisdiction over their activities. In response, Idaho and the other states have filed an amicus curiae brief supporting Nevada, emphasizing their position that the states’ rights to regulate or prohibit sports betting should prevail.
The legal battle centers around the activities of new online platforms, including Kalshi and Crypto.com, which are marketing sports betting products as financial derivatives on federally regulated exchanges. These platforms claim their offerings are not traditional sports wagers but rather financial products akin to derivatives. This classification has led to confusion over regulatory authority. For example, Kalshi reported significant trading volumes during the Super Bowl in February 2026, indicating a robust market interest under the current regulatory uncertainty.
Previously, the CFTC had hesitated to approve these betting contracts. However, in a notable shift in September 2025, the Commission issued guidance indicating that it had not sanctioned such contracts, allowing for state laws to potentially intervene. Nevertheless, a subsequent leadership change in the CFTC led to a revision of its position, claiming these contracts fall under the category of ‘swaps’, which are regulated exclusively at the federal level.
The coalition’s legal brief presents four primary arguments: the limits of federal agency jurisdiction, the necessity for explicit congressional authorization, the preservation of state powers, and the CFTC’s lack of gambling-specific expertise. Federal agencies, they argue, cannot expand their jurisdiction autonomously, especially in areas traditionally managed by states, such as gambling. They cite U.S. Supreme Court precedents that require clear congressional intent for federal agencies to impose broad regulatory measures on issues of national significance. According to the coalition, Congress did not intend for the CFTC to extend its regulatory framework to encompass sports betting when it reformed derivatives market oversight post-financial crisis.
Furthermore, the coalition highlights the historical precedence of states in managing gambling regulations, including licensing, age verification, and responsible gaming measures. In contrast, they argue, the CFTC lacks both the expertise and the statutory mandates necessary for effectively regulating gambling activities.
The Ninth Circuit Court is currently reviewing merged appeals that will determine whether state gambling laws can be enforced against platforms offering event contracts and prediction markets on federal exchanges. The coalition of states is urging the court to uphold state authority over such activities, regardless of how these platforms characterize their offerings.
Looking forward, the outcome of this case will significantly influence the regulatory landscape for sports betting and related financial products. Should the court side with the coalition, states will retain the ability to control sports gambling within their borders, potentially impacting the operations of platforms like Kalshi and Crypto.com. Conversely, a decision favoring the CFTC could signal a shift towards more centralized federal oversight of these emerging markets. The legal proceedings are set to continue, with stakeholders on all sides closely monitoring developments and preparing for possible regulatory adjustments depending on the court’s ruling.
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