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House hearing scrutinizes CFTC and sports contract trading on prediction market exchanges

Legal Writer

Publish Date: Jul 22, 2026

Fact checked by: Matt Moreno

Key Points

U.S. House of Representatives subcommittee held hearing on sports event contract trading on Tuesday
Two-hour hearing featured testimony from attorneys, gaming industry officials, and a risk management professional
Discussion questioned adequacy of CFTC to oversee trading and participants encouraged Congress to act on prediction market exchanges

The United States House of Representatives Committee on Agriculture’s Subcommittee on Commodity Markets, Digital Assets, and Rural Development met in the nation’s capitol on Tuesday on the topic of “Examining Customer Protections and Market Integrity in Sports Event Prediction Markets.”

Five individuals from professional backgrounds including lobbying for gambling companies, the practice of law, and risk management testified during the hearing as to their views on sports event contracts on prediction market exchanges and the Commodity Futures Trading Commission (CFTC).

Much of the discussion, both in lawmakers’ questioning and participants’ responses, cast doubt on the fitness of the CFTC as currently composed to maintain markets and protect consumers. Participants also pressed lawmakers to use the force of law to limit sports event contract trading.

The U.S. Capitol Building is seen on a clear, spring day on May 30, 2026 in Washington, DC.

(Photo by Kevin Carter/Getty Images)

Hearing takes aim at CFTC adequacy to oversee prediction market exchanges

The five individuals that gave testimony at the hearing on Tuesday included two attorneys that had worked for the CFTC in the past.

David Bean - Indian Gaming Association Chairman
Chris Cylke - American Gaming Association Senior VP of Government Relations
Carl Kennedy - Katten Muchin Rosenman partner
Asaf Meir - Solidus Labs CEO
Robert Schwartz - Morgan, Lewis & Bockius partner

During the hearing, the most poignant question about the CFTC’s oversight of sports event contract trading came Rep. Kristen McDonald Rivet (Democrat, Michigan-8). McDonald Rivet pointed to the CFTC’s order to Kalshi to defy a state court in Michigan, and Schwartz responded.

“I think certainly it was an extraordinary action,” Schwartz said. “I think more than anything else, it speaks to the need for clarity in this space. Because you’re right: an exchange like Kalshi that is caught in the middle of its federal regulator and a court order, I don’t know what the best advice would be. I think in this situation, Kalshi actually had followed the court order by the time the commission issued its order telling it not to, so it was too late. But it certainly was a flex.”

Other questions pointed to the current composition of the CFTC, consisting solely of Chair Michael Selig. Bean gave the sharpest comment on that aspect of the situation.

“No one voted for this [sports contract trading],” Bean stated. “Congress has not passed any new laws on this matter. This has happened because one person has declared online sports gambling is legal in every state and on every reservation. One man has taken the CFTC from crops to props.”

While participants agreed on the need for Congress to act on setting boundaries around sports event contract trading, there was disagreement about the nature of those contracts.

Testimony clashes on legal definition of sports event contracts

The subcommittee chair, Rep. Dusty Johnson (R, South Dakota-At Large), steered the conversation onto how Congress members should view sports event contract trading in terms of their legality.

“They [prediction markets] have grown to a size and a scope that few of us could have imagined even just two years ago,” Johnson quipped. “As with many emerging technologies, our laws are being asked to answer questions that we had never really contemplated when we wrote the laws years ago.”

Divergent opinions surfaced when Johnson opened the floor for comments on that topic.

“That’s why Congress wrote the words commodity and swap broadly,” Kennedy responded. “Not because it wanted a free-for-all, but because it knew new products would keep showing up, and it wanted the CFTC to be ready for them. Making room for that kind of innovation is exactly what Congress demanded of the CFTC. Sports event contracts are just the newest product to walk through that door.”

“Let’s be clear. So-called sports event contracts are sports betting,” Cylke countered. “A customer puts money on a sports outcome and gets paid if they are correct. 41 state attorneys general agree. These products are sports betting and must be subject to state gambling laws.”

Johnson summated the hearing by expressing that Congress should not leave the future of sports event contract trading solely to the CFTC and the courts. However, the content of the testimony shows why getting a majority of House members and U.S. Senators together on one proposal will be difficult.

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