Labrador Letter: Defending Idaho’s Right to Regulate Gambling

Dear Friends,

Last week, Idaho joined 38 other states in pushing back against a federal agency that claims it just discovered the power to override state gambling laws nationwide. The Commodity Futures Trading Commission (CFTC) is now arguing it has exclusive authority over sports betting, a position that contradicts decades of settled law and threatens Idaho's right to regulate gambling within our borders.

In January 2025, online platforms like Kalshi and Crypto.com started offering sports betting. They called it "events contracts" on federally-regulated exchanges, but it was just sports betting with a new label. Users bet on game scores, player performance, and other sports outcomes. Kalshi alone reported over $1 billion in wagers on Super Bowl Sunday.

For about a year, the CFTC stayed out of it. In September 2025, the agency even warned these platforms that it had never approved sports betting contracts and that states could shut them down. Then new leadership took over at the end of 2025, and everything changed. When Crypto.com sued Nevada to stop the state from enforcing its gambling laws, the CFTC sided with the platform. The agency now claims that because these bets happen on CFTC-regulated exchanges and technically qualify as financial instruments called "swaps," states have no authority to regulate them.

The problem is Congress never granted the CFTC that authority. When Congress gave the agency jurisdiction over swaps in 2010, it was responding to the 2008 financial crisis. Sports betting wasn't on anyone's mind because it was illegal in most states at the time. The idea that Congress secretly transferred all state gambling authority to a federal agency overseeing Wall Street, without anyone noticing for fifteen years, makes no sense.

Our brief makes four main arguments. First, federal agencies have no special authority when interpreting the scope of their own jurisdiction, especially when claiming new powers that expand their authority. Second, under Supreme Court precedent, broad claims of federal agency authority over significant topics require clear congressional authorization. Congress never clearly authorized the CFTC to regulate sports betting when it granted authority over Wall Street swaps. Third, when Congress intends to shift traditional state powers to federal control, it must speak clearly. Gambling regulation has long been a core state function. Fourth, the CFTC itself has previously acknowledged it lacks expertise in gambling regulation and has no clear statutory mandate to regulate it, while states have extensive experience with age limits, addiction programs, and consumer protections.

States know how to regulate gambling. We impose licensing requirements, background checks, age verification, and responsible gambling programs. The CFTC allows platforms to self-certify their contracts with no pre-approval and has no gambling-specific regulations. States that have legalized sports betting can protect their citizens. States that ban sports betting can enforce those bans. That's how it should work.

The CFTC now claims it found 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.

Best regards,