The CFTC issued two measures Friday: a proposed rule that would define event contracts as swaps, and an interim final rule that excludes casino-style gambling from the swap definition. The agency asserts its authority amid state lawsuits and a Supreme Court fight.
The Commodity Futures Trading Commission is pressing its claim over prediction markets, issuing two measures Friday that would formally define event contracts as "swaps" under federal law while carving out traditional gambling.
A proposed rule pulls event contracts into the swap definition
The first measure, a proposed rule open for public comment, would expressly expand the definition of "swap" to include event contracts, including those tied to sports, politics, cultural events and weather. The CFTC said the contracts are financial instruments known to the trade as swaps and that the move resolves any ambiguity about their status.
Chairman Michael Selig said in a statement that these products are commodity derivatives within the CFTC's regulatory remit under the Commodity Exchange Act and within the agency's exclusive jurisdiction.
An interim final rule excludes casino-style gambling
The second measure, an interim final rule, takes effect immediately upon publication. It codifies the agency's longstanding view that casino-style gambling products, including sportsbook wagers and casino games, fall outside the swap definition. According to Selig: "Casino-style gambling products are not derivatives."
Both measures carry 30-day comment windows.
The jurisdictional fight behind the rules
Together, the rules sharpen a distinction at the center of a jurisdictional dispute. If event contracts are swaps, they fall under the CFTC's authority, which Selig has argued is exclusive, and that would place platforms like Kalshi and Polymarket beyond the reach of state gambling regulators. Multiple states have sued prediction-market operators alleging illegal gambling, and the CFTC has countersued.
The filings formalize proposals the agency sent to the White House for review late last month. Meanwhile, a court split over whether event contracts qualify as federally regulated swaps, pitting the NFL and others against Kalshi, has drawn the Supreme Court's attention. The justices may ultimately decide the question the CFTC is trying to settle by regulation.
Source: Decrypt
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