The Commodity Futures Trading Commission has submitted two proposed rules to the White House that aim to solidify its regulatory authority over prediction markets. The proposals seek to define event contracts as swaps, placing them under CFTC oversight and potentially preempting state gambling regulations.
The CFTC's proposed rules could significantly alter the regulatory landscape for prediction markets, potentially consolidating oversight under the agency and impacting how these platforms operate and are regulated across different states.
The Commodity Futures Trading Commission (CFTC) is seeking to assert greater control over prediction markets by submitting two new rules to the White House. On September 28, the agency sent proposals to the Office of Information and Regulatory Affairs (OIRA) that aim to redefine the legal classification of event contracts.
One of the proposals is a rule that would explicitly include event contracts within the definition of a "swap." If enacted, this would place these contracts under the CFTC's exclusive jurisdiction, potentially shielding platforms like Kalshi and Polymarket from state-level gambling regulations. This move comes amid a significant jurisdictional battle, fueled by conflicting appeals-court decisions that have reached the Supreme Court.
The second proposal is an interim final rule that would exclude "casino-style gambling products" from the swap definition. Both rules were classified by the CFTC as not economically significant, and their full text has not yet been made public.
This regulatory push by the CFTC is part of a broader trend of agencies establishing their own policies in areas like crypto, particularly following the Clarity Act. The agency has also recently sent a separate crypto-market rulemaking to the White House and issued advisories warning about the potential for manipulation in "mention markets," which settle based on whether a person says specific words. The CFTC is currently investigating former Rep. Adam Kinzinger over bets placed on Kalshi related to his own potential pardon.
Meanwhile, state-level actions continue. New York last week sued Polymarket, seeking to ban its operations within the state, mirroring earlier actions against Kalshi. These filings signal the CFTC's intent to use regulatory definitions to settle ongoing legal disputes.
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