Senators Challenge CFTC Over Sports Gaming Event Contracts

The letter, which includes additional signatories Ruben Gallego (D-AZ), Alex Padilla (D-CA), Adam Schiff (D-CA), and Elissa Slotkin (D-MI), argues the CFTC permits certain firms to categorize sports betting products as “event contracts.” This designation, the lawmakers contend, allows the activity to operate on a national scale under the guise of federal regulation, directly overriding established state and tribal gaming laws. The Senators stressed that the CFTC is expressly forbidden from permitting event contracts that “involve gaming, are unlawful under federal or state law or are contrary to the public interest.”

Overriding State and Tribal Sovereignty

The core of the Senators’ concern lies in what they perceive as the federalization of an area of law reserved for states and tribes. The letter highlights that by allowing companies to claim they offer legal sports betting in all fifty states, the CFTC is preventing the enforcement of sovereign state and tribal gaming regulations. This approach, the Senators argue, undermines the authority of jurisdictions to regulate gambling.

The lawmakers point out that firms operating under the CFTC’s umbrella bypass critical state and tribal regulatory structures. These include licensing requirements, background investigations, minimum age requirements, federal anti-money laundering rules, and consumer protections such as addiction warnings and integrity monitoring.

The Senators asserted that the CFTC “does not have the authority or the capacity to replicate” the rigorous standards already required by state and tribal licensed entities. They noted that numerous states and a bipartisan group of 36 state attorneys general have already issued cease-and-desist letters and amicus briefs affirming state jurisdiction over sports wagering.

Call for Enforcement and Specific Clarifications

The Senators are demanding immediate action from the CFTC to enforce its regulations. They specifically called on the agency to enforce Regulation 40.11, which they argue clearly mandates the prevention of illegal event contracts involving sports gaming.

The letter culminates in a request for the CFTC to answer 11 detailed questions no later than October 30, 2025. Key inquiries focus on the agency’s legal interpretation and enforcement failures. They ask:

• Why the CFTC is not enforcing its clear regulatory mandate under Regulation 40.11, and when it will resume enforcement to prevent illegal event contracts?
• How the CFTC ensures firms comply with state and tribal laws, including age restrictions, budgeting limits, and resources for gambling addiction, especially in states where sports betting remains illegal?
• How the CFTC ensures compliance with the Federal Wire Act, including the use of geolocation data and anti-money laundering standards?
• How the CFTC prevents the manipulation of sports outcomes by athletes, referees, and other personnel?
• Whether the CFTC views sports betting products as entertainment or investment products for financial gain?

The Senators stated that the “continued availability of illegal sport event contracts in all 50 states further reaffirms the need for the CFTC to enforce its own regulations mandated by Congress.”