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The Commodity Futures Trading Commission is pressing its claim over prediction markets, issuing a pair of measures Friday that would formally define event contracts as "swaps" under federal law while carving out traditional gambling.
The first, a proposed rule opened 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 "commonly known to the trade as swaps" and that the move resolves any ambiguity about their status. "These products are commodity derivatives squarely within the CFTC's regulatory remit under the Commodity Exchange Act and are within the agency's exclusive jurisdiction," Chairman Michael Selig said in a statement.
The second, an interim final rule effective immediately upon publication, draws the opposite line, codifying the agency's longstanding view that casino-style gambling products, including sportsbook wagers and casino games, are excluded from the swap definition.
"Casino-style gambling products are not derivatives," Selig said, framing the step as clarifying "the limits of its regulatory remit." Both measures carry 30-day comment windows.
Together, the two rules sharpen a distinction at the heart of a fierce jurisdictional fight: if event contracts are swaps, they fall under the CFTC's authority, which Selig has argued is exclusive, placing 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 to defend its turf.
The filings formalize proposals the agency sent to the White House for review late last month, part of a broader push that has seen the CFTC assert its authority rather than wait on Congress.
The agency has broadly taken a pro-industry approach toward both traditional and cryptocurrency markets. The Commission recently issued no-action relief letting crypto apps offer regulated derivatives and sent separate crypto-markets rulemakings forward.
The legal stakes for prediction markets are climbing. 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, meaning the question the CFTC is now trying to settle in regulation may ultimately be decided by the justices.
