CFTC sends duelling prediction-market definitions to White House review

The Commodity Futures Trading Commission has sent two proposed prediction-market rules to the White House for review, including one that would explicitly place event contracts within the definition of a swap and another that would exclude “casino-style gambling products” from it.

The proposals were submitted to the Office of Information and Regulatory Affairs on Sept. 28. OIRA, part of the Office of Management and Budget, reviews federal regulations before publication. The filings signal regulatory intent rather than completed rules, and the proposals’ full text has not yet been released.

RIN 3038-AF82 would further define “swap” to include event contracts and would be subject to public comment. RIN 3038-AF81 is listed as an interim final rule that would remove casino-style gambling products from the swap definition. Both were classified as not economically significant.

The procedural distinction could prove important. The interim rule could take effect upon approval, while Daniel Wallach said an interim final rule ordinarily becomes effective immediately upon release without the usual notice-and-comment process. He said it could still face later challenge under the Administrative Procedure Act.

The filings go to the central question confronting platforms such as Kalshi and Polymarket: whether their event contracts are swaps regulated exclusively by the CFTC or gambling products subject to state law. The agency has argued that most prediction-market contracts, including sports-related ones, are swaps within federal jurisdiction.

States have taken the opposite position, contending that some platforms run illegal gambling operations, fail to meet state age-limit requirements and avoid state taxes. A coalition of 44 state attorneys general told the CFTC in July that it lacked authority over sports-related event contracts, arguing that its then-pending proposal exceeded statutory powers and was arbitrary and capricious.

The dispute has moved through courts as well as rulemaking. A federal appeals court allowed Ohio and Tennessee to enforce their sports-gambling laws against Kalshi, rejecting the company’s claim that federal law protected its sports contracts from state regulation. New Jersey Attorney General Jennifer Davenport has asked the Supreme Court to take up the jurisdictional question after differing lower-court outcomes.

The CFTC itself has sued states to defend its asserted authority. In June, it sued New Mexico after the state brought an action against KalshiEX LLC, seeking a declaration that federal law gives the commission exclusive authority over event contracts and an injunction against enforcement of state laws it considers preempted.

As covered in August, the agency had already outlined a broader prediction-market rulemaking agenda focused on market rules, reporting and consumer protections. A separate CFTC proposal published in June addressed when event-contract derivatives could be deemed contrary to the public interest and therefore barred from listing or clearing through CFTC-registered entities; it drew 1,458 comments.

The regulatory stakes have risen with the market’s growth. The CFTC has said trading volume across CFTC-registered prediction markets exceeded $25 billion in 2025, while noting that event contracts can be used to hedge exposure to outcomes involving economics, politics, weather, cultural trends and sport.

The two new submissions could sharpen the legal boundary between event contracts and gambling products, but their operative language will not be known until the rules are published after White House review.