A dozen bills, one confirmed commissioner, and a $50 billion World Cup. Congress has finally started asking who regulates sports event contracts — and answered nothing.
A US House subcommittee held its first hearing on sports event contracts this week, following more than a dozen proposed bills. Gaming and tribal trade groups want a federal ban; derivatives attorneys favour CFTC oversight instead. No consensus emerged, a categorical ban looks unlikely, and most observers expect the Supreme Court to settle it.
- The Hearing and Who Testified
- Two Ways to Read Sports Event Contracts
- Why a Ban on Sports Event Contracts Is Unlikely
- The Road to the Supreme Court
A US House subcommittee has held its first hearing on sports event contracts. It followed more than a dozen bills introduced in Congress to set guardrails on the sector. The House Agriculture Subcommittee on Commodity Markets, Digital Assets, and Rural Development convened the two-hour session on Tuesday. Five witnesses appeared, including the American Gaming Association, the Indian Gaming Association, two derivatives attorneys, and a market-surveillance executive. According to Sports Event Contracts Alabama Representative Shomari Figures, it was the most balanced witness panel he had seen. However, no consensus emerged. The jurisdictional question at the heart of the dispute remains open.
The Hearing and Who Testified
The panel split along predictable lines. The AGA and IGA both argue states and tribal nations are losing revenue to prediction markets. Both are trade bodies whose members compete directly with these platforms. Two attorneys gave the market-side view, including Carl Kennedy, a derivatives lawyer with prior CFTC experience, and Robert Schwartz, a former CFTC general counsel. Asaf Meir, chief executive of Solidus Labs, testified on surveillance tools for detecting insider trading. That last contribution matters more than it sounds. Insider-information risk is the integrity question these markets share with conventional sports betting. The hearing followed a May Senate session on sports integrity that turned into a prediction-markets argument. So Congress has now looked at the sector twice in three months. According to South Dakota Representative Dusty Johnson, who chairs the subcommittee, this will not be the last hearing. He said Congress has an obligation to find common ground rather than stay silent. The revenue side of this dispute sits in our report on US gaming’s record revenue amid the prediction-market fight.
Two Ways to Read Sports Event Contracts
The whole dispute reduces to a classification question. Prediction-market advocates say sports event contracts work like grain or corn futures. That puts them under the Commodity Futures Trading Commission, the federal derivatives regulator. CFTC Chair Michael Selig has consistently asserted the agency holds jurisdiction over sports event contracts. In contrast, gaming and tribal groups see no meaningful difference from a sportsbook wager. According to IGA chairman David Bean, practically nothing separates these contracts from over/unders, parlays, and props. He also argued the CFTC is badly understaffed, describing its shift from crops to props under a single commissioner. That staffing point is factually grounded. Selig remains the only Senate-confirmed member of a commission designed for five. However, Bean speaks for tribal operators whose exclusivity these platforms threaten, so the characterisation is advocacy as well as observation. Both readings are internally coherent. That is precisely why the fight has lasted. The tribal position is set out in our report on US tribal gaming’s record year.
Why a Ban on Sports Event Contracts Is Unlikely
Bean is pushing Congress to advance HR 7840. The Event Contract Enforcement Act, authored by Representatives Blake Moore and Salud Carbajal, would amend the Commodity Exchange Act. It would bar federally registered exchanges from offering sports event contracts outright. However, the legislative arithmetic is brutal. According to GovTrack, under 3% of standalone bills introduced in 2025 became law. So the base rate alone makes passage improbable in a divided Washington. Kennedy opposed a categorical ban on the merits. He favours letting the CFTC exercise the authority Congress already granted it. Designated Contract Markets such as Kalshi must satisfy 23 core principles to obtain and keep CFTC designation. Kennedy described those principles as the foundation of oversight for such exchanges. His preferred standard would hold each individual contract against them, testing customer protection and market integrity contract by contract. That is a middle path, and it is worth noting he practises derivatives law, a field that benefits from CFTC jurisdiction surviving. The CFTC’s own draft rules point the same direction. Its comprehensive proposed rules on sports event contracts referenced a public-interest test more than 500 times. Before finalising, the agency will decide whether particular sports derivatives run contrary to the public interest. House Agriculture Committee chair GT Thompson called the draft encouraging, praising its clearer standards and workable definitions. So the likeliest near-term outcome is regulatory calibration, not prohibition.
The Road to the Supreme Court
Most industry observers expect the courts to settle this. New Jersey appears set to petition the Supreme Court for review of the Third Circuit’s decision favouring Kalshi. According to Schwartz, the former CFTC general counsel, another case could also reach the court first. He said predicting the timing is impossible. That uncertainty is the operating condition for everyone involved. A federal framework paired with state taxation is theoretically available to Congress. However, state regulators are wary of surrendering control to Washington, which narrows the compromise space considerably. Schwartz made one observation worth holding onto. The market-integrity question does not divide along party lines. He suggested that bipartisan character improves the odds of eventual legislative action. So the sector faces two parallel tracks: slow rulemaking at the CFTC and faster-moving litigation through the federal courts. Neither has produced a settled answer. Johnson’s commitment to further hearings suggests Congress intends to keep participating regardless. Trade coverage of the litigation, including AGBrief, tracks the state cases. How other jurisdictions resolved the same question appears in our report on Ireland’s action against Polymarket and Kalshi.
Frequently Asked Questions
What are sports event contracts?
They are derivative contracts traded on prediction markets that pay out based on sporting outcomes. Advocates compare them to commodity futures, placing them under CFTC oversight. Gaming and tribal groups argue they are functionally identical to sportsbook wagers such as over/unders, parlays, and props, and should fall under state gambling law.
What happened at the House hearing?
A House Agriculture subcommittee heard from five witnesses over two hours, including the American Gaming Association, Indian Gaming Association, two derivatives attorneys, and a market-surveillance executive. No consensus emerged on jurisdiction. The subcommittee chair said further hearings will follow, calling it Congress’s obligation to seek common ground.
Will Congress ban sports event contracts?
It appears unlikely. HR 7840 would bar federally registered exchanges from offering them, but under 3% of standalone bills introduced in 2025 became law, according to GovTrack. Testimony favoured tailored CFTC oversight over prohibition, and the agency’s own draft rules point toward calibration rather than a ban.
What is the CFTC’s public-interest test?
It is the standard the CFTC will apply to decide whether particular sports derivatives run contrary to the public interest. The concept appeared more than 500 times in the agency’s comprehensive draft rules released last month. House Agriculture chair GT Thompson praised the draft for providing clearer standards and workable definitions.
Could the Supreme Court decide this?
Many industry observers expect so. New Jersey appears likely to petition for review of the Third Circuit ruling favouring Kalshi, though another case could arrive first. A former CFTC general counsel testified that predicting the timing is impossible, leaving the jurisdictional question unresolved for now.
Why does CFTC staffing matter here?
The commission is designed for five members but currently has one Senate-confirmed commissioner, Chair Michael Selig. Critics argue an agency asserting jurisdiction over a multibillion-dollar new market is under-resourced to supervise it. Supporters counter that existing core principles for registered exchanges provide the oversight framework already.
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