Idaho has joined a coalition of 39 states in a legal challenge against what they allege is an attempted expansion of regulatory authority by the Commodity Futures Trading Commission (CFTC), the state’s Attorney General Raul Labrador announced on Monday.
The coalition seeks to have federal courts reject the CFTC’s assertion that it holds exclusive jurisdiction over certain sports betting activities. This is a move the states argue would strip them of their traditional power to regulate or prohibit sports gambling within their borders.
This challenge comes amid broader uncertainty over the agency’s evolving stance on prediction markets and event contracts, particularly following recent internal shifts and policy debates within the regulator.
‘Idaho will continue defending our right to regulate gambling’
In a release, Labrador explained that “states like Idaho that choose to ban sports betting would be prevented from enforcing those bans under the CFTC’s theory”.
“An unelected federal agency claims it discovered hidden authority in fifteen-year-old financial reform laws to override state gambling laws nationwide,” he continued. “Congress never granted that power, and Idaho will continue defending our right to regulate gambling as we see fit.”
The legal dispute escalated to the Ninth Circuit Court of Appeals after Nevada initiated a lawsuit against Kalshi and similar platforms seeking to enforce its state gambling laws. The CFTC filed a brief supporting the platforms, arguing for federal pre-emption.
In response, Idaho and 38 other states submitted an amicus curiae brief backing Nevada. The coalition emphasises that the CFTC’s position, if upheld, would preclude states, including Idaho, from enforcing prohibitions or regulations on sports betting.
Dispute over regulatory authority
The controversy centres on a new generation of online platforms, including Kalshi and Crypto.com, that have started offering wagers on sports outcomes through federally regulated exchanges.
These platforms have promoted their products as financial derivatives rather than conventional sports bets. Kalshi reported that customers traded upwards of $1 billion worth of contracts on the Super Bowl in February 2026.
Historically, the CFTC had refrained from endorsing these contracts. In September 2025, the agency issued an advisory clarifying that it had not approved such contracts and acknowledged that state laws could block them.
However, following a change in the CFTC’s leadership, the commission reversed its stance and, in ongoing litigation, contended that these contracts qualify as ‘swaps’, a category of financial instruments subject to exclusive federal regulation.
The four key arguments
The coalition’s brief articulates four key arguments; limits on federal agency jurisdiction, requirement for clear congressional authorisation, preservation of state powers and lack of CFTC expertise.
Federal agencies cannot expand their jurisdiction unilaterally, particularly in domains traditionally regulated by states such as gambling. Supreme Court precedents demand explicit congressional authorisation for agencies to impose broad rules affecting matters of substantial national importance. The coalition asserts that Congress did not expressly empower the CFTC to regulate sports betting when it authorised oversight of derivatives markets after the financial crisis.
Transfers of traditional state functions to federal control must be explicit. Gambling regulation has historically been a core state function.
Unlike states, with established licensing regimes, age-verification systems, responsible gaming policies and integrity monitoring, the CFTC lacks both gambling-specific expertise and statutory mandates in this sphere.
The Ninth Circuit is presently considering consolidated appeals concerning whether state gambling enforcement can apply to platforms offering event contracts and prediction markets through federally regulated exchanges.
The 39-state coalition urges the court to confirm that states retain the authority to regulate or prohibit betting activities regardless of the platforms’ characterisation of their products.
Original article: https://igamingbusiness.com/sports-betting/sports-betting-regulation/idaho-joins-39-state-coalition-challenging-cftc-expansion-over-sports-betting/
