House Subcommittee Holds First Hearing on Sports Event Contracts as Regulatory Battle Heats Up

Hearing Marks New Chapter in Prediction Markets Debate

The U.S. House of Representatives convened its first hearing on sports event contracts and prediction markets this week, signaling that congressional interest in the asset class is far from over. The hearing, held Tuesday by the House Agriculture Subcommittee on Commodity Markets, Digital Assets and Rural Development, focused on market integrity and the regulatory framework for derivatives tied to sporting events. It follows a Senate hearing in May that touched on similar issues and comes amid a flurry of proposed legislation aimed at establishing guardrails for the rapidly growing industry.

Trading volume during the 2026 FIFA World Cup reportedly exceeded $50 billion, underscoring strong public demand for sports event contracts and intensifying the clash between federal and state regulators over who has authority to oversee them.

Witnesses Present Divided Views

The subcommittee heard from five witnesses representing diverse perspectives. Two gaming industry trade groups—the American Gaming Association (AGA) and the Indian Gaming Association (IGA)—argued that states and tribal nations are losing significant revenue to unregulated prediction markets. Two attorneys, including derivatives specialist Carl Kennedy and former CFTC general counsel Robert Schwartz, provided market-focused insights. Asaf Meir, CEO of Solidus Labs, testified on market surveillance tools to detect insider trading.

Alabama Representative Shomari Figures described the hearing as the “most balanced” in terms of witness composition, generating robust intellectual debate. The IGA’s David Bean testified that the CFTC is severely understaffed and has shifted its focus “from crops to props,” arguing that sports event contracts are essentially indistinguishable from traditional sports wagers like parlays and over/unders.

CFTC Pushes for Jurisdiction, States Push Back

The Commodity Futures Trading Commission (CFTC) has taken the lead in defending its authority over sports event contracts, with Chair Michael Selig repeatedly asserting the agency’s jurisdiction since his appointment. In a comprehensive proposed rulemaking released last month, the CFTC referenced a “public interest test” more than 500 times, aiming to determine whether certain sports derivatives should be allowed.

House Agriculture Committee Chair GT Thompson wrote that the draft “provides clear standards for the public interest” and workable definitions for long-undefined terms. However, state regulators remain wary of ceding control. Carl Kennedy, co-chair of financial markets at Katten Muchin Rosenman LLP, argued that multiple agencies can regulate different aspects of the same asset, comparing event contracts to gold—which can be bought from a local dealer (state law), traded as futures (CFTC), or held as an ETF (SEC).

Categorical Ban Unlikely, But Legislation Advances

Bean urged Congress to pass HR 7840, the “Event Contract Enforcement Act,” which would amend the Commodity Exchange Act to prohibit federally registered exchanges from offering sports event contracts. However, with less than 3% of standalone bills enacted into law in 2025, according to GovTrack, the path to passage is steep. Kennedy opposed a blanket ban, advocating instead for a tailored approach that lets the CFTC enforce its 23 core principles for designated contract markets like Kalshi.

More Hearings Expected, Supreme Court Looms

Most industry observers expect the fight over sports event contracts to ultimately reach the U.S. Supreme Court. Robert Schwartz noted that New Jersey will likely petition the high court for review of a Third Circuit decision favoring Kalshi, though another case could arrive first. Schwartz remarked that the issue “does not break cleanly along red and blue lines,” adding that its bipartisan nature “bodes well for people who would like to see action.”

Subcommittee Chair Dusty Johnson of South Dakota vowed that Tuesday’s hearing would not be the last. “We have an obligation to drive toward finding out what is the common ground,” he said.