The U.S. Commodity Futures Trading Commission (CFTC) has issued one rule and proposed another in an effort to solidify Chairman Mike Selig’s view that prediction markets transactions are properly regulated by his agency alone.
What Happened
The CFTC announced a formal rule on Friday that defines event contracts—such as bets on sports outcomes, political events, or weather—as swaps.
This classification places them under federal oversight, not state-level gambling regulators.
The agency is also proposing to include such contracts on platforms like Kalshi and Polymarket within its existing swap regulations.
Key Facts
- The interim final rule is immediately effective and open to public comment.
- The proposed rule defines event contracts as swaps, excluding casino-style gambling from that category.
- State regulators have objected, arguing they have jurisdiction over such markets.
- Several states have filed legal challenges, with some federal courts already ruling against the CFTC.
- The CFTC submitted these actions to the White House less than two weeks ago, showing a rapid internal process.
Background: How It Works
Under U.S. law, a swap is a contractual agreement between parties involving the exchange of assets or values.
The CFTC argues that prediction markets—where users bet on future events—meet this definition.
By classifying them as swaps, the agency claims exclusive federal authority over these instruments.
It explicitly excludes casino-style gambling, such as wagers at tribal or state sportsbooks, from this definition.
Why It Matters
This move strengthens the CFTC’s legal position in an ongoing dispute with several states.
If the CFTC is called before the U.S. Supreme Court, it will have a clear policy framework to present.
Companies like Kalshi support this view, seeing the CFTC as their only regulatory body.
Legal experts note that the rule may improve the agency’s position in court, though its actual effectiveness remains uncertain.
Limitations and Open Questions
The rule does not resolve all legal disputes.
Multiple state governments continue to assert authority over prediction markets.
Recent federal appellate rulings have split—some support the CFTC, others support state claims.
The Supreme Court has been asked to resolve the issue, pending final legal outcomes.
What to Watch Next
Legal challenges from states are expected to continue.
The U.S. Supreme Court may issue a definitive ruling on whether prediction markets fall under federal swap regulation.
Public comment periods on the proposed rule will allow stakeholders to respond before final adoption.
Source: Coindesk
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