CFTC Sends White House New Rules to Cement Its Grip on Prediction Markets
The Commodity Futures Trading Commission sent two rule proposals to the White House's Office of Information and Regulatory Affairs on Sept. 28 that would recast how "swaps" are defined for event contracts. One proposal would expressly classify event contracts as swaps and go to public comment, while an interim final rule would carve out "casino-style gambling products" from that definition and could take effect immediately.
Why It Matters
Labeling event contracts as swaps would place prediction markets under exclusive CFTC authority and shield them from state gambling regulation, resolving a jurisdictional dispute playing out across appeals courts and now attracting the Supreme Court's attention. The agency's move continues a recent pattern of the CFTC setting policy through rulemaking rather than waiting for Congress, affecting platforms such as Kalshi and Polymarket.
Key Facts
- Submission date: Sept. 28 (submitted to OIRA)
- Proposed rule RIN: 3038-AF82 (would include event contracts as swaps; to be published for public comment)
- Interim final rule RIN: 3038-AF81 (would exclude "casino-style gambling products" from the swap definition; could take effect upon approval)
- Economic significance: CFTC classified both rules as not economically significant
- Platforms mentioned: Kalshi and Polymarket
The Commodity Futures Trading Commission has forwarded two rulemakings to the White House review office that would reshape the legal status of event contracts traded on prediction-market platforms. The first proposal (RIN 3038-AF82) would explicitly add event contracts to the statutory term "swap" and will move to a public comment period. The second action (RIN 3038-AF81), issued as an interim final rule, would simultaneously exclude what the agency calls "casino-style gambling products" from that swap definition and could become effective upon approval. The swap designation matters because it determines which regulator has authority. If event contracts are classified as swaps, the CFTC asserts exclusive jurisdiction, which would place platforms outside the regulatory reach of state gambling authorities. That position is central to ongoing litigation: multiple states have sued prediction-market operators alleging illegal gambling, while the CFTC has filed countersuits to preempt state oversight. Conflicting rulings in appeals courts over whether these contracts qualify as swaps have elevated the dispute to the Supreme Court. The filings reflect a broader trend of the CFTC advancing policy through its own rulemaking in the wake of the Clarity Act, rather than relying on Congress. The agency recently sent a separate rulemaking on crypto markets to the White House and has issued staff guidance warning that certain contract types, such as "mention" markets tied to public statements, are particularly vulnerable to manipulation. The full texts of the two swap-definition rules have not yet been published. Regulatory scrutiny of prediction markets continues on multiple fronts. The CFTC is investigating former Representative Adam Kinzinger over bets on Kalshi linked to his own pardon, and states remain active: New York last week sued Polymarket seeking to bar the platform from operating in the state, echoing earlier enforcement actions against Kalshi. For now, the CFTC filings indicate its intended regulatory approach rather than finalized rules, but they signal the agency's intent to settle the swap-definition dispute administratively as courts and states litigate the matter.