Idaho has joined a coalition of 39 states in a legal battle against the Commodity Futures Trading Commission (CFTC), which they accuse of overstepping its regulatory authority in sports betting. The state's Attorney General, Raul Labrador, made the announcement on Monday, indicating a push to block the CFTC's claim that it has exclusive jurisdiction over certain sports betting activities. The coalition argues that this assertion would undermine their traditional powers to regulate or ban sports gambling within their states.
This challenge arises during a period of uncertainty concerning the CFTC's evolving position on prediction markets and event contracts, particularly following recent shifts in agency policy.
Labrador stated, "States like Idaho that choose to ban sports betting would be prevented from enforcing those bans under the CFTC’s theory." He further asserted, "An unelected federal agency claims it discovered hidden authority in fifteen-year-old financial reform laws to override state gambling laws nationwide. Congress never granted that power, and Idaho will continue defending our right to regulate gambling as we see fit."
The dispute has escalated to the Ninth Circuit Court of Appeals, prompted by Nevada's lawsuit against Kalshi and other platforms attempting to enforce state gambling laws. The CFTC has supported these platforms, advocating for federal pre-emption of state laws.
In response, Idaho and the 38 other states submitted an amicus curiae brief to back Nevada, emphasizing that upholding the CFTC’s position would prevent them from enforcing their regulations on sports betting.
The contention centers around a new wave of online platforms, including Kalshi and Crypto.com, which are offering wagers on sports outcomes through federally regulated exchanges. These platforms market their offerings as financial derivatives rather than typical sports bets. Kalshi reported that customers traded over $1 billion in contracts during the Super Bowl in February 2026.
Typically, the CFTC had shied away from endorsing these contracts. However, in September 2025, the agency issued guidance clarifying that it had not approved such contracts and noted that state laws could obstruct them. Following a leadership change, the CFTC reversed its position, asserting that these contracts qualify as 'swaps', placing them under exclusive federal regulation.
The coalition's brief presents four main arguments: limits on federal agency jurisdiction, the need for clear congressional authorization, the safeguarding of state powers, and a lack of expertise from the CFTC in gambling matters.
The coalition asserts that federal agencies cannot expand their jurisdiction without explicit congressional consent, especially in sectors traditionally governed by states like gambling. Supreme Court precedents necessitate clear authorization from Congress for agencies to impose broad regulations on matters of significant national importance. The group contends that Congress did not grant the CFTC the power to regulate sports betting when it authorized oversight of derivatives post-financial crisis.
The coalition insists that any transfer of state functions to federal oversight must be made explicit. They also argue that the CFTC, unlike states which have established licensing systems, age-verification processes, responsible gaming policies, and integrity monitoring, lacks the necessary expertise and legal authority to govern in this sector.
The Ninth Circuit is currently reviewing consolidated appeals regarding whether state gambling enforcement applies to platforms providing event contracts and prediction markets through federally regulated exchanges. The 39-state coalition is urging the court to affirm that states maintain the authority to regulate or prohibit betting activities, regardless of how these platforms label their products.
