Comment Text:
Comment on Advance Notice of Proposed Rulemaking on Prediction Markets
Commodity Futures Trading Commission RIN 3038‑AF65
On behalf of Delaware North, which operates in compliance with state gaming laws and voter approved frameworks across the United States, and employs 4,000 Americans at our gaming properties nationwide, we appreciate the opportunity to comment on the Advance Notice of Proposed Rulemaking (ANPRM) on prediction markets. Delaware North CEO Lou Jacobs currently serves as chair of the American Gaming Association, the premier organization tasked with protecting the integrity of gaming across the United States.
We strongly oppose the expansion of sports betting, casino-style wagering, and insider trading through so-called “event contracts” that function as unregulated gambling and bypass longstanding and constitutionally mandated states’ rights to determine whether and how gaming is regulated. This further includes tribal nations that through state compacts offer gaming as a mechanism to fund their governments and community initiatives. In addition to creating a federalism conflict as states attempt to assert their regulatory authority, prediction markets put children, athletes, and public figures in danger. Prediction market platforms have allowed participants to gamble on and profit from a litany of contracts that are clearly contrary to the public interest, as well as current Commodity Futures Trading Commission (CFTC) restrictions. This includes not just sports, politics, and government action, but natural disasters, war, terrorism, assassinations, and various other forms of human suffering.
1. Unregulated Gambling, Not Risk‑Management Instruments
CFTC-regulated contract markets were historically intended to provide a means for managing and assuming price risks and allow limited hedging of real economic exposure for participants facing underlying commercial, financial, or operational risk due to the buying and selling of commodities. By contrast, most modern prediction market participation – particularly in sports, elections, and entertainment – reflects purely speculative wagering by participants with no preexisting material economic exposure to the underlying event. In short, prediction market platforms are corrupting a legitimate risk-management tool of commodities and the true intentions of commodities trading for the exchange’s own financial gain.
Sports related contracts without a bona fide commodity risk now account for most of the trading volume on major prediction platforms, underscoring that these prediction market platforms are now being used primarily for speculative gambling rather than price discovery or risk management. The risk management rationale cited in the Commodity Exchange Act (CEA) is absent, and these contracts function as zero‑sum gambling products. Such contracts are contrary to the public interest because they undermine consumer protections, mislead the public, and facilitate evasion of state and tribal gaming laws and regulations while providing no meaningful risk management or price discovery to market participants. Labeling gambling wagers as “event contracts on the derivatives market” does not change the functional use.
Event contracts that function as zero-sum gambling and lack a bona fide risk management function and are against the public interest, are precisely the type of products Congress empowered the Commission to prohibit under CEA Section 5c(c)(5)(C) and rule 17 CFR § 40.11(a)(1), commonly referred to as rule 40.11, which was unanimously adopted after Congress amended the CEA in 2010 under Dodd-Frank. That authority reflects a clear judgment that not all outcome-based contracts fall within the legitimate scope of the derivatives markets, particularly where contracts serve no price discovery or commercial purpose, or are threatening to the public interest. In the Federal Register, the CFTC wrote, “Prohibition of certain ‘gaming’ contracts is consistent with Congress’s intent to ‘prevent gambling through the futures markets’ and to ‘protect the public interest from gaming…’”
Congress never intended the CEA to protect gaming. Congress never intended for the CFTC to regulate such contracts, and prediction market platforms dilute the CFTC’s power and authority over legitimate risk-management contracts. This was further exemplified when a former Chairman of the CFTC and the Security and Exchange Commission (SEC), Gary Gensler, stated earlier this month, “I never once ever heard a member of Congress or their staffs suggest that the law they were writing, acting upon, and voting on was for our little agency, the CFTC, to have oversight over sports betting.”
As described in more detail below, most event contracts being traded today, particularly in sports and elections, are contrary to the public interest. Among other serious flaws, the offering of these contracts undermines state rights, threatens state revenues, is subject to heightened risks of insider trading and manipulation of underlying events, infringes on tribal sovereignty, and lacks the necessary safeguards to mitigate serious risks to public health.
2. Undermining of State Gaming Authority and Voter Intent
States have exercised their traditional legislative and regulatory power to determine whether, how, and under what conditions gambling may occur within their state borders. Where sports betting has been legalized, it has followed extensive public debate, legislative action, and in some cases voter approval. Once approved, sports betting is subject to strict regulations and safeguards, including age minimums (typically 21), licensing, state taxation, advertising restrictions, geofencing, and problem gambling requirements. Prediction market platforms utilize virtually none of these safeguards, including in states such as Utah where all gambling is strictly prohibited, or Nevada where state courts have ruled that prediction market platforms are not permitted to offer wagering in the state on non-commodities such as sports, elections, or other events.
As previously stated, prediction markets offering contracts on sports betting are evading state laws and regulations entirely by claiming federal preemption under the CEA. This directly undermines state sovereignty, and in some cases voter intent, allowing wagers to be placed by individuals in states that have rejected legalized sports betting or imposed tight restrictions. Recent state enforcement actions, including cease‑and‑desist actions and litigation, reflect the fact that these platforms are operating outside lawful state gaming regulatory bodies.
Permitting sports contracts under the Commodity Exchange Act flies directly in the face of constitutional principles of federalism and states’ rights. Further, the 2018 Supreme Court decision overturning the Professional and Amateur Sports Protection Act (PASPA) ruled that states have police powers to regulate gaming, and that any federal legislation threatening those rights was unconstitutional. The Commission should be wary of interpreting the CEA in a manner that upends settled state authority, erodes the democratic process, and transforms a statute designed to regulate commodities markets into a vehicle for federal preemption of state gambling law.
Unregulated prediction markets also threaten to erode state lottery revenues that fund essential public services, particularly education. Like legitimate sports betting, state lotteries operate under strict statutory mandates and revenue allocation requirements designed to ensure that gambling activity produces clear public benefit. When prediction markets offer chance-based wagering outside this framework, they divert consumer spending away from lotteries without contributing to education funding, scholarships, and school budgets that lotteries support. This displacement undermines a longstanding state policy choice to channel limited gambling activity toward broadly shared public good rather than private, untaxed platforms.
In fact, legal sports betting generated more than $3.7 billion in state tax revenue in 2025 (excluding negotiated tribal compact payments). By contrast, prediction markets contributed nothing to state tax revenue, while taking money away from legitimate state- and voter-approved sports betting, lottery, and brick-and-mortar casino revenues.
3. Insider trading
Prediction markets present heightened risks of insider trading and information misuse that are not adequately addressed by existing CFTC regulation. Because event contracts often rely on non-public, real-world outcomes, individuals with first access to nonpublic, privileged, real-world situational intelligence may be uniquely positioned to trade on information unavailable to the broader public. Such insiders include athletes, coaches, referees, league officials, elected officials, campaign staff, election administrators, government employees, corporate employees, media insiders, and others. In many instances, these individuals can and do directly influence the underlying event itself, amplifying manipulation risks far beyond those seen in traditional sports betting. This drastically and dangerously undermines market integrity, erodes public confidence, and exposes participants to unfair and deceptive practices. Contracts that hinge on human behavior rather than market forces raise serious concerns under the Commodity Exchange Act’s core principles and the public‑interest standard. The Commission seems to recognize that insider trading risks are not incidental but inherent, evidenced by a recent memo of understanding with Major League Baseball to protect sports integrity. It is important to note, however, that no such MOU exists with the National Basketball Association, National Hockey League, any publicly traded corporation, the Federal Elections Commission, and so forth. Within existing state regulated sports wagering, those relevant individuals are in most cases specifically banned from placing wagers, but in all cases are monitored to verify the integrity of games, contests, and participation of individuals. Numerous elected offices, including The White House, have sent communication to staff to prohibit them from participating in these activities. On April 23, 2026, after a U.S. soldier was charged with using classified information to place prediction market bets, President Trump clearly stated, “The world, unfortunately, has become somewhat of a casino,” and “I was never much in favor of it. I don’t like it conceptually.... I’m not happy with any of that stuff.”
4. Violation of Tribal Sovereignty
The proliferation of sports and casino‑style event contracts on prediction markets also threatens tribal sovereignty and carefully negotiated federal‑tribal‑state gaming compacts. In states across the U.S., tribes operate gaming pursuant to rights recognized under the Indian Gaming Regulatory Act (IGRA), which gives tribes exclusivity to offer gaming products on their land, and through compacts that are the product of sovereign‑to‑sovereign negotiations with states and the federal government. These arrangements often grant tribes exclusivity or primary authority over sports betting and casino gaming in exchange for revenue sharing, in addition to economic development commitments and responsible‑gaming obligations. Allowing prediction market operators to offer functionally identical wagering products nationwide – including on sovereign territory – circumvents tribal compacts and conflicts with longstanding federal policy to protect tribal sovereignty. Prediction market platforms undermine the integrity of IGRA and risk destroying the balance Congress deliberately struck between states, tribes, and the federal government for decades. This was exemplified recently by United States Supreme Court Justice Neil Gorsuch, who stated: “…the original bargain struck in the Constitution is that tribes are sovereigns. They’re treated just like other sovereigns; they’re paired in the Commerce Clause with states and foreign nations.”
5. Harm to Young People and Individuals with Problem Gambling
Unlike state regulated gaming operators, prediction market platforms are more easily accessible by users of any age. Platforms lack uniform self‑exclusion systems and are not subject to responsible‑gaming obligations or best practices.
This is particularly alarming given extensive public health evidence showing that online sports betting and gambling‑like products disproportionately harm some young adults and individuals with gambling addiction. The National Council on Problem Gambling has warned that prediction markets expose consumers to risks comparable to traditional sports betting while lacking equivalent safeguards. Research indicates that younger users are at a higher risk, especially in online and mobile betting environments that feature continuous wagering, micro‑bets, and gamified interfaces.
Permitting casino‑style and sports event contracts under the guise of a financial regulatory body blurs the line between investing and wagering and makes it more difficult for vulnerable individuals – particularly minors – to recognize and seek help for gambling‑related harm.
Prediction markets also present material money laundering risks due to the absence of mandatory safeguards typically required of gambling and financial institutions. Unlike state licensed casinos, sportsbooks, and lotteries – which are subject to robust anti‑money laundering (AML) monitoring, and reporting requirements – many prediction market platforms operate without comparable AML obligations or oversight. Allowing gambling‑like products to operate outside established and compulsory AML frameworks undermines efforts to combat financial crime and further demonstrates why these contracts are contrary to the public interest when offered under the guise of derivatives trading.
6. Election Integrity
Election related event contracts raise separate and profound concerns. The potential for insiders, campaigns, and foreign actors to trade on privileged or harmful information presents risks that far exceed risk management utility, as the Commission itself has previously acknowledged in related contexts. For example, in a 2024 Notice of Proposed Rulemaking on event contracts, former CFTC Chairman Rostin Behnam underscored this concern when disapproving political event contracts, stating that such contracts would improperly place the Commission in the role of policing elections. The risks of manipulation, misinformation, and public distrust are amplified when political activity is influenced by markets that were never intended to regulate wagers on civic outcomes. Just as those today claim polling is not reflective of the current state of affairs, markets could be manipulated just as easily to sway an election one way or another.
7. Slot- and Casino-style Contracts – Looking to the Future
As platforms seek to expand participation and revenue, event contracts are being packaged and marketed in ways that mirror traditional casino products, emphasizing rapid play and continuous wagering. Electronic gaming machines adapted for prediction markets were showcased at recent industry trade shows such as the International Casino Exhibition (ICE). Casino‑style gaming is clearly the desired commercial trajectory for prediction market platforms, under the guise of financial trading, further eroding any claim to bona fide risk-management. Allowing such products to develop within the CFTC framework risks transforming CFTC-regulated derivatives markets into de facto digital casinos – without appropriate licensing requirements, game integrity and monitoring, or consumer protections.
The Need for Clear Prohibitions and Deference to State Law
We urge the Commission to use this rulemaking opportunity to draw clear, enforceable lines:
1. Reject claims of risk-management or investing opportunity where there is no commodity at risk, and products function as gambling.
2. Prohibit sports event contracts, casino‑style contracts, and politically based contracts as contrary to the public interest under CEA Section 5c(c)(5)(C).
3. Reject categorical claims of federal preemption and affirm that gambling regulation and enforcement is a matter of state gaming law, not federal commodities regulation.
4. Ban insider trading via prediction platforms especially among athletes, coaches, referees, league officials, campaign staff, election administrators, elected officials, government employees, corporate employees, media insiders, and anyone with non-public information or intelligence.
5. Protect hard-won tribal sovereignty and the rights of tribes to operate gaming pursuant to rights recognized under IGRA.
6. Ensure that federal regulation is not used to weaken consumer protections that states have deliberately adopted to combat addiction, underage gambling, and other social harms.
7. Protect the integrity of elections and ensure political activity is not influenced by markets that were never intended to regulate wagers on civic outcomes.
8. Ban casino-style event contracts, which clearly have no risk-management benefit to consumers.
Conclusion
Prediction markets are operating as de facto casinos and sportsbooks. Prediction markets threaten to dismantle carefully balanced state regulatory systems, expose young people and vulnerable populations to unregulated gambling, and erode public confidence in both markets and democratic institutions. Innovation should not come at the expense of public health, federalism, or the rule of law. We respectfully urge the Commission to adopt a regulatory framework that prevents regulatory evasion and preserves the vital role of states in gaming regulation.
