Posted on

Should states have jurisdiction over sports event or gambling contracts formed in their states?

Scroll down to see more content

I reviewed Maryland state and federal court findings and rulings for 3 September 2026 on event contracts and prediction markets. Nothing stood out to me except for the possibility that the U.S. Supreme Court may address the question whether prediction markets could extract taxes from the States and transfer them to the federal governments.

The State of New Jersey is arguing that prediction markets are actually sport betting platforms, supporting Nevada’s argument that it can regulate sports betting. The Commodity Futures Trading Commission is arguing the opposite; that sports betting cannot be regulated by the States and that sports betting falls under federal jurisdiction.

Based on the media reports I have read, I believe that the States will want to define sports betting contracts as gaming products.

For traders placing bets on the outcome, the question is whether the U.S. Supreme Court will hold that sports betting contracts are subject to federal jurisdiction.

Gaming refers to the activity of gambling or wagering with the prohibition applying if the event contract’s terms, conditions, or references connect to such activity.

This classification, at least at first glance, should be fine with the CFTC as long as the entity is treating the sports betting contract as an excluded commodity.

(19) Excluded commodity

The term “excluded commodity” means—

(i)an interest rate, exchange rate, currency, security, security index, credit risk or measure, debt or equity instrument, index or measure of inflation, or other macroeconomic index or measure;

(ii)any other rate, differential, index, or measure of economic or commercial risk, return, or value that is—

(I) not based in substantial part on the value of a narrow group of commodities not described in clause (i); or

(II) based solely on one or more commodities that have no cash market;

(iii) any economic or commercial index based on prices, rates, values, or levels that are not within the control of any party to the relevant contract, agreement, or transaction; or

(iv)an occurrence, extent of an occurrence, or contingency (other than a change in the price, rate, value, or level of a commodity not described in clause (i)) that is—

(I) beyond the control of the parties to the relevant contract, agreement, or transaction; and

(II) associated with a financial, commercial, or economic consequence.

Sports betting contracts, based on my reading of the law, should not be regulated by the CFTC. States should have the option of allowing betting on these contracts within their respective jurisdictions.