Comment Text:
April 30, 2026
Christopher Kirkpatrick, Secretary
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street NW
Washington, DC 20581
Re: Prediction Markets, RIN 3038-AF65
Dear Secretary Kirkpatrick,
I submit these comments on behalf of the Casino Association of New Jersey (CANJ). CANJ is a trade organization that provides a collective voice for the Atlantic City casino industry by facilitating the exchange of information and ideas between our industry, small businesses, Atlantic City stakeholders and the general public. Our member companies directly employ over 22,000 people and generate over a billion dollars in state and local tax revenue per year.
The Atlantic City casino industry exists because New Jersey (NJ) voters and legislators made a deliberate choice: to permit gaming within a carefully constructed regulatory framework designed to protect consumers, generate public revenue, and anchor economic activity in a community that depends on it. Under this framework, every CANJ member:
- operates under the rigorous oversight of the State of New Jersey;
- pays substantial gaming taxes that fund senior and disabled resident programs through the Casino Revenue Fund;
- funds problem gambling treatment and self-exclusion programs;
- verifies the age and identity of every patron;
- monitors for suspicious activity; and
- complies with anti-money laundering obligations that exceed those of most financial institutions.
This framework allows us the privilege of offering gaming to the public, and it is the reason New Jersey consumers can wager with confidence that the games are fair and the operators accountable.
Prediction markets offering event contracts on sporting events and other gaming outcomes undercut the regulated industry in New Jersey. Prediction market companies offer products that are functionally indistinguishable from the sports wagers and prop bets available via regulated NJ sportsbooks, but they do so outside of the frameworks outlined above. The result is a two-tiered market in which licensed New Jersey operators bear the full cost of compliance while out-of-state platforms capture New Jersey customers, New Jersey wagering dollars, and the tax revenue that would otherwise flow to the state.
The stakes for New Jersey and Atlantic City are high. In addition to our 22,000 direct jobs, the NJ gaming industry sustains tens of thousands of other jobs across hospitality, construction, entertainment, and other services throughout the region. Every dollar diverted to a prediction market is a dollar that does not benefit New Jersey.
In response to the questions asked in the Commodity Futures Trading Commission’s Advance Notice of Proposed Rulemaking regarding Prediction Markets (91 Fed. Reg. 12516 (March 16, 2026)), CANJ respectfully submits the following comments.
I. Sports event contracts are not swaps (or other commodities) under the Commodity Exchange Act.
The Commission should confirm that sports event contracts—including game winners, spreads, player props, and parlays—do not qualify as swaps, options, or futures under the Commodity Exchange Act (CEA), and therefore the Commission's jurisdiction does not extend to them. The fact that an event contract is self-certified and traded on a designated contract market (DCM) is not enough to meet the definition of a "swap" or a commodity option, and event contracts do not independently satisfy the statutory definition of a swap or any other commodity.
As to swaps, the Commission’s rules should make clear that:
(1) the statutory term “event or contingency” refers to a significant occurrence that creates commercial risk against which businesses might hedge, not uncorrelated economics resulting from an entertainment event;
(2) the statutory term “associated with a potential financial, economic, or commercial consequence” limits swaps to those tied to pre-existing and direct commercial exposures (downstream or attenuated effects are insufficient);
(3) sports event contracts meet neither prong of the definition, because they create (rather than hedge against) financial risk, and have no inherent financial or economic consequences.
Sports event contracts are not options because they confer no right to purchase anything at a predetermined price; consumers cannot buy or sell the underlying sporting event outcomes. Nor are they futures, because they involve no future delivery duty.
The practical consequences of a contrary interpretation are real: every dollar of handle diverted to a prediction market is a dollar on which no New Jersey gaming tax is paid, no Casino Revenue Fund contribution is made, and no responsible gaming or self-exclusion obligation attaches.
II. The Commission correctly prohibited sports event contracts under Rule 40.11.
CANJ urges the Commission to retain Rule 40.11(a), which categorically prohibits gaming contracts. The Commission should also reject rule changes that would weaken the categorical bar or create a case-by-case pathway for gaming contracts.
Rule 40.11(a)(1) bars any DCM-listed contract that "involves" gaming, and sports contracts "involve" gaming under New Jersey law. In New Jersey, a "sports event" includes "any professional sport or athletic event, any Olympic or international sports competition event and any collegiate sport or athletic event, or any portion thereof, including, but not limited to, the individual performance statistics of athletes in a sports event or combination of sports events." A wager on that outcome is a "sports pool," defined by NJ regulation as "the business of accepting wagers on any sports event by any system or method of wagering." That definition captures every sports event contract that prediction market companies currently offer.
New Jersey's regulators have independently determined that sports event contracts are gaming. In March 2025, the New Jersey Division of Gaming Enforcement (DGE) issued cease-and-desist letters to prediction market companies, determining that their sports event contracts constituted "unauthorized sports wagering" under state law and the New Jersey Constitution. The DGE demanded the platforms immediately cease operations and void all such wagers placed in New Jersey. A contract that the State's own gaming enforcement agency, one of the most experienced and well-resourced in the nation, identifies as illegal sports wagering does not merely "relate to" gaming at the margins. It is gaming.
The self-certification procedure under CEA § 5c(c)(1) and Part 40 of the Commission's rules is a filing mechanism, not an approval mechanism. The statute and the rule require that an event contract comply with the Act and the Commission's regulations. A filing that fails to comply is not saved by the absence of a Commission objection. Rule 40.11(a) is a substantive prohibition applicable to DCMs, and a contract that "involves" gaming violates that prohibition whether or not staff acted within the certification period.
Rule 40.11(a)(1) separately bars contracts involving activity “unlawful under any State or Federal law.” Under the New Jersey Sports Wagering Act, no entity may offer a sports pool or online sports pool to the public without a state-issued sports wagering license. Doing so is a crime. New Jersey further requires that all sports wagering servers be physically located within Atlantic City, that operators implement age verification and identity authentication, and that every licensee participate in the State's self-exclusion and responsible gaming programs. A sports event contract offered to New Jersey residents by an unlicensed prediction market company with no self-exclusion obligations and no responsible gaming infrastructure, satisfies the “unlawful under State law” prong independently of the gaming analysis.
Each of these grounds is sufficient on its own. Together, they make clear that Rule 40.11(a) does, and should continue to, categorically bar these contracts.
III. The Commission should not federalize gaming regulations.
The Commission should decline to federalize gaming regulation. In addition to lacking statutory authority to regulate gaming nationwide, the Commission lacks the institutional competence to do so.
Congress has legislated repeatedly and deliberately in the gaming space, and in every instance, it has structured the federal role around deference to state law and authority:
- The Indian Gaming Regulatory Act conditions tribal gaming on compacts negotiated with the states in which tribes are located.
- The Wire Act prohibits interstate transmission of sports wagering information but has long been interpreted to accommodate state-authorized activity.
- The Unlawful Internet Gambling Enforcement Act expressly defines "unlawful Internet gambling" by reference to the law of the state in which the bet is placed or received and explicitly disclaims any federal expansion of gambling prohibitions.
- The Supreme Court, in striking down the Professional and Amateur Sports Protection Act, returned the authority to legalize and regulate sports wagering to the states.
None of these statutes assigns the Commission any role in gaming regulation, and none was drafted against the backdrop of a federal commodities regulator asserting jurisdiction over bets. Reading the CEA to federalize sports wagering would place commodities law in direct tension with the entire federal gaming framework Congress has built.
New Jersey's experience illustrates why Congress was right to leave this to the States. The NJ Constitution was amended by popular vote to authorize casino gambling. The Legislature enacted the Casino Control Act and the Sports Wagering Act. The DGE is staffed by attorneys, investigators, and accountants, and it enforces those laws through a licensing, auditing, and surveillance regime that has operated continuously for nearly five decades.
The CFTC, however capable in its own domain, has no comparable apparatus for consumer protection in the gaming context, no self-exclusion infrastructure, no problem gambling intervention protocols, and no experience regulating an industry that serves millions of retail consumers placing real-time wagers on entertainment outcomes.
The CFTC risks destabilizing the licensed gaming industry nationwide. If a sports event contract listed on a DCM is a "swap," then a materially identical product offered by a state-licensed sportsbook is also a swap. If that is the case, then every such sportsbook is, by the same logic, an unregistered swap dealer offering unregistered swaps to retail customers. That is an absurd result, and its consequences would reach tens of thousands of jobs, billions of dollars in public investment, and decades of considered state regulatory judgment.
The Commission should confirm what the CEA's text and Rule 40.11(a) already provide: sports event contracts are gaming, gaming is regulated by the States, and the Commission's jurisdiction lies elsewhere.
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CANJ respectfully urges the Commission to retain the categorical bar on gaming contracts under Rule 40.11(a), decline to assert jurisdiction over sports event contracts, and preserve the authority of the States to regulate gaming as their citizens and legislators have directed. New Jersey's regulated gaming industry was built on a constitutional amendment, decades of legislative refinement, and a rigorous enforcement apparatus that protects consumers, funds public programs, and sustains tens of thousands of jobs. That framework should not be displaced by a federal commodities regime that was never designed for this purpose and lacks the tools to do it responsibly.
