Morgan Lewis partner Schwartz defends CFTC jurisdiction over sports prediction markets in House testimony
Rob Schwartz, partner at Morgan Lewis, testified before a US House Agriculture subcommittee on sports event prediction markets. He discussed the Commodity Exchange Act's framework for event contracts and the CFTC's exclusive jurisdiction. Separately, a coalition of 44 state attorneys general wrote to the CFTC arguing the agency lacks authority over sports prediction markets and urged it to draft new rules consistent with the Commodity Exchange Act.
Schwartz's testimony frames sports event contracts as squarely within existing CFTC authority, directly countering the 44 state attorneys general who want the agency to shrink its footprint. That creates a sharp split between the federal regulator's traditional defenders and a new state coalition eager to reclaim gambling oversight turf. For CFTC-registered platforms like Kalshi and Polymarket, the collision means their federal license could become either a shield or a target depending on which branch wins the argument.
A House panel that accepts Schwartz's framing would strengthen CFTC preemption against state courts that have already stripped Kalshi's shield in Washington and New York. A panel sympathetic to the state letter would invite more legislative riders that override registration entirely. The platforms' legal strategy now turns on whether Congress sees event contracts as financial innovation or as gambling dressed in commodity language.