CFTC Submits Dual Rules to White House Seeking to Classify Event Contracts as Swaps

The Commodity Futures Trading Commission (CFTC) has submitted two event contract rules to the White House for review. The regulator sent both measures this week to the Office of Information and Regulatory Affairs within the Office of Management and Budget. The CFTC classified both as not economically significant, and their full text has not been made public.

The submission seeks to place prediction markets under federal authority rather than state gambling oversight, as reported by Yogonet International.

Rules to Redefine Swaps and Exclude Certain Products

The first is a proposed rule identified as RIN 3038-AF82. It would amend the regulatory definition of a “swap” to explicitly cover event contracts, the yes-or-no products traded on prediction markets. This proposal will go to public comment before it can become final.

The second is an interim final rule designated RIN 3038-AF81. It would exclude “casino-style gambling products” from the swap definition and could take effect once approved. Interim final rules are an unusual tool for this kind of line-drawing. Agencies typically use them when they want a regulation to apply while public comments are still being collected.

Swaps fall under the Commodity Exchange Act, which the CFTC administers. CFTC Chairman Michael Selig has argued that this authority is exclusive. Platforms offering the contracts would then sit outside the reach of state gambling regulators.

State Litigation and Parallel Agency Actions

Several states dispute that claim. Ohio and Tennessee have argued that sports event contracts violate their state gambling laws and litigated against the agency. Multiple states have sued prediction market operators over alleged illegal gambling. The CFTC has filed countersuits to block that oversight.

New York sued Polymarket last week with the aim of banning the platform in its jurisdiction. This echoes an earlier action against Kalshi. New Jersey‘s attorney general has asked the US Supreme Court to review the jurisdictional question. Appeals courts have issued conflicting decisions on whether the contracts qualify, drawing the Supreme Court’s attention.

The rules follow other CFTC steps this year. In June the agency issued a notice of proposed rulemaking on how to assess event contracts tied to specified activities including gaming. On September 22 its Division of Market Oversight published an advisory on “mention markets” that settle based on whether a named person says certain words. The advisory flagged elevated manipulation risks and suggested such contracts should be presumed readily susceptible to manipulation.

Kalshi and Polymarket both operate as CFTC-registered designated contract markets for event contracts. Crypto.com and Robinhood also offer similar products. The filings represent statements of intent rather than final regulations. Both rules must first clear White House review. The proposed rule will then go through its own process. A Supreme Court ruling on the jurisdictional question could alter the legal landscape regardless of what the CFTC writes into its rules.

Reporting: Yogonet International

Generated by SCCG’s automated editorial system from published source reporting. SCCG Management holds editorial responsibility.