Kalshi and CFTC tell court sports contracts need not be swaps; 44 states push back
Kalshi, Polymarket, and the CFTC argued against Rhode Island on Monday that sports event contracts need not qualify as swaps to be legal. Meanwhile, a 44-state coalition including the New Jersey attorney general filed a July 27 comment letter opposing CFTC jurisdiction over sports event contracts. The coalition wants these contracts to remain under state gambling oversight rather than federal commodity regulation. The arguments come amid ongoing litigation over how to classify sports-related event contracts.
The dual-track fight over sports event contracts is splitting along federal-versus-state lines in real time. Kalshi's narrow legal argument — that swaps status is not required for legality — matters because the CFTC's regulatory umbrella is the only federal shield the platform has left. The 44-state coalition, led by the New Jersey attorney general, wants to strip that umbrella away and return oversight to state gambling commissions.
Every state that wins this jurisdictional fight forces Kalshi and Polymarket to build state-by-state compliance walls or exit markets entirely. Traders face a growing patchwork where contract validity depends on geography, not federal registration. The Rhode Island hearing and the multi-state comment letter are parallel fronts in the same war: who gets to say whether these contracts are legal. A CFTC rule loss would leave both platforms exposed in every state that moves against them, with no national fallback.