In a five-page letter sent to the Commodity Futures Trading Commission (CFTC), Jackie Johnson, the Director of the Arizona Department of Gaming (ADG), strongly urges the federal regulator to prohibit prediction markets.
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Johnson's letter to the CFTC is the latest attempt from a state-level regulator to rein in prediction markets. The CFTC has been silent, and arguably, complicit in the proliferation of prediction markets across the US.
What Does Johnson's Letter Ask Of The CFTC?
Simply put, Johnson asks the CFTC to ban prediction markets. The Director's argument rests on how similar sport event contracts on sites like Kalshi, Robinhood, or Crypto.com are to bets made at a sportsbook, as well as how these contracts are outside the public interest.
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"In truth, there is no meaningful difference between buying one of the contracts offered by the [prediction market] and placing a bet with any other sportsbook. And, whatever regulation the CFTC undertakes, it does not reflect the desires of the citizens of Arizona." -Jackie Johnson, Director, Arizona Department Of Gaming |
It's a fair case to make from the ADG. Arizona only opened to legalized gambling to profit from the proceeds of the industry and to protect a public that was already engaging in the activity illegally.
Prediction markets are knowingly circumventing state laws, arguing they are a federally regulated platform and don't need to adhere to such laws.
CFTC Lack Of Action On Prediction Markets
State regulators have been angered with the CFTC's lack of action on prediction markets for months now.
A roundtable hosted by the CFTC was scheduled for April 2025; the roundtable intended to inform the commission's approach to regulation. But at the last minute, the regulator cancelled the roundtable without reason.
Earlier last month, the federal regulator also dropped its case in a D.C. District Court against Kalshi's political event contracts.
As I've written already, with the lack of leadership at the top of the federal regulator, the CFTC is likely to remain silent for the foreseeable future.
Johnson's letter was addressed to Acting-Chair Caroline Pham, who has already indicated she will step down once nominated chair Brian Quintenz is confirmed by the Senate. Meaning Johnson's letter will likely fall on deaf ears.
Related Prediction Market News
Positive Development For State Regulators
As previously mentioned, Kalshi has several legal challenges with ongoing cases in Maryland, New Jersey, and Nevada.
In Nevada, a judge recently ruled to allow the Nevada Resort Association (NRA) to intervene in a lawsuit between the prediction market operator and the Nevada Gaming Control Board (NGCB). The NRA successfully argued that they have a stake in this fight as they represent 70 resorts.
Judge Andrew Gordon's ruling to allow the NRA to intervene brings more resources to the table in favor of the state regulator.
