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(AsiaGameHub) – Idaho has joined a 39-state coalition in a legal challenge against what the states claim is an effort by the Commodity Futures Trading Commission (CFTC) to expand its regulatory authority, Idaho Attorney General Raul Labrador announced Monday.
The coalition is asking federal courts to reject the CFTC’s claim that it has exclusive jurisdiction over specific sports betting activities—a move the states say would strip them of their longstanding power to regulate or ban sports gambling within their borders.
This legal action comes amid broader uncertainty about the agency’s evolving stance on prediction markets and event contracts, particularly following recent internal changes and policy debates at the regulator.
‘Idaho will continue defending our right to regulate gambling’
In a statement, Labrador said, “Under the CFTC’s reasoning, states like Idaho that opt to ban sports betting would be unable to enforce those bans.”
“An unelected federal agency says it found hidden authority in 15-year-old financial reform laws to override state gambling laws across the country,” he added. “Congress never granted that power, and Idaho will keep fighting to protect our right to regulate gambling as we see fit.”
The legal dispute escalated to the Ninth Circuit Court of Appeals after Nevada sued Kalshi and similar platforms to enforce its state gambling laws. The CFTC filed a brief supporting the platforms, arguing for federal preemption.
In response, Idaho and 38 other states submitted an amicus curiae brief backing Nevada. The coalition stresses that if the CFTC’s position is upheld, states—including Idaho—would be barred from enforcing sports betting prohibitions or regulations.
Dispute over regulatory authority
The controversy centers on a new generation of online platforms—including Kalshi and Crypto.com—that have begun offering wagers on sports outcomes through federally regulated exchanges.
These platforms have promoted their products as financial derivatives rather than conventional sports bets. Kalshi reported that customers traded more than $1 billion worth of contracts tied to the February 2026 Super Bowl.
Historically, the CFTC had refrained from endorsing these contracts. In September 2025, the agency issued an advisory clarifying it had not approved such contracts and acknowledged state laws could block them.
However, following a change in CFTC leadership, the commission reversed its stance and, in ongoing litigation, argued that these contracts qualify as “swaps”—a category of financial instruments subject to exclusive federal regulation.
The four key arguments
The coalition’s brief outlines four key arguments: limits on federal agency jurisdiction, the need for clear congressional authorization, preservation of state powers, and the CFTC’s lack of expertise.
Federal agencies cannot unilaterally expand their jurisdiction—especially in domains like gambling that states have traditionally regulated. Supreme Court precedents require explicit congressional approval for agencies to impose broad rules affecting matters of substantial national importance. The coalition asserts Congress did not expressly empower the CFTC to regulate sports betting when it authorized oversight of derivatives markets after the financial crisis.
Transfers of traditional state functions to federal control must be explicit. Gambling regulation has long been a core state responsibility.
Unlike states—which have established licensing regimes, age-verification systems, responsible gaming policies, and integrity monitoring—the CFTC lacks both gambling-specific expertise and statutory mandates in this sphere.
The Ninth Circuit is presently considering consolidated appeals concerning whether state gambling enforcement applies to platforms offering event contracts and prediction markets through federally regulated exchanges.
The 39-state coalition urges the court to confirm that states retain the authority to regulate or prohibit betting activities regardless of how platforms characterize their products.
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