Idaho has aligned with a coalition of 39 states in a legal challenge that questions whether a federal regulator can assert authority over certain forms of sports betting. The dispute focuses on how emerging betting-style products are classified and whether control over them should remain with states.

The action was announced by Idaho Attorney General Raúl Labrador, who joined other state officials in opposing a position taken by the Commodity Futures Trading Commission. The agency has argued that some products tied to sports outcomes qualify as financial instruments, placing them under federal jurisdiction.

Idaho Pushes Back Against Federal Interpretation

The disagreement stems from platforms offering “event contracts,” which allow users to speculate on sports outcomes such as scores and player performance. These products emerged in early 2025 and have been marketed as financial contracts traded on regulated exchanges, even though users engage with them in a manner similar to sports betting.

Idaho and other states argue that this classification should not shift regulatory authority away from state governments. Labrador addressed the issue directly, stating in a press release, “States like Idaho that choose to ban sports betting would be prevented from enforcing those bans under the CFTC’s theory.” He added, “An unelected federal agency claims it discovered hidden authority in fifteen-year-old financial reform laws to override state gambling laws nationwide. Congress never granted that power, and Idaho will continue defending our right to regulate gambling as we see fit.”

The coalition maintains that gambling oversight has historically been handled at the state level. Officials point to established systems that include licensing frameworks, consumer protection rules, and enforcement mechanisms as evidence of state expertise in the field.

The legal dispute is tied to the expansion of platforms such as Kalshi and Crypto.com, which have introduced event-based contracts linked to sports competitions. These offerings have seen increased participation, including more than $1 billion reportedly wagered on the Super Bowl in February 2026.

For much of 2025, the CFTC had not endorsed these contracts. The agency issued guidance in September of that year stating it had not approved them and warning that state laws could still apply. That position shifted after a leadership change, when the agency filed a legal brief supporting the platforms.

Under the revised stance, the CFTC argues that these contracts fall within its exclusive authority as “swaps,” a category of financial instruments regulated at the federal level. If upheld, this interpretation would prevent states from enforcing their own gambling laws against such offerings.

Case Moves to Federal Appeals Court

According to Dailyfly News, the dispute is now before the U.S. Court of Appeals for the Ninth Circuit, where Nevada is seeking to apply its gambling laws to the platforms in question. Idaho and the broader coalition have submitted a legal brief supporting Nevada’s position.

The coalition argues that federal agencies cannot expand their jurisdiction without explicit authorization from Congress. It also maintains that any transfer of regulatory authority from states to the federal government must be clearly defined in legislation, especially in areas such as gambling that have long been governed locally.

State officials further contend that the CFTC lacks the specialized experience required to regulate gambling activities. Unlike state systems, which often include age verification processes, responsible gambling measures, and oversight mechanisms, the federal framework does not provide comparable safeguards for these types of products.