CFTC Submits Event Contract Rule Proposals for White House Review Amid Conflicting State and Federal Court Rulings

The Commodity Futures Trading Commission has forwarded two proposed rule changes to the White House for review. One would expand the definition of a swap to include event contracts. The other, submitted as an interim final rule, would exclude casino-style gambling products from that definition.

The submissions to the Office of Information and Regulatory Affairs come as disputes intensify over whether prediction markets fall under exclusive federal oversight or remain subject to state gambling laws. Platforms including Kalshi, Polymarket, Rothera, and Novig trade these contracts on outcomes from elections and Federal Reserve decisions to sports results and celebrity events. Chairman Michael Selig, the agency’s sole member, must vote on the measures after review before any public comment period.

Conflicting Court Rulings Intensify Jurisdictional Disputes

A federal appeals court ruled last week that Ohio and Tennessee may enforce their sports gambling laws against Kalshi. The decision rejected Kalshi’s claim that federal law and CFTC oversight preempt state regulation. New Jersey Attorney General Jennifer Davenport petitioned the U.S. Supreme Court in September for review of whether Kalshi sports contracts qualify as swaps. New York has filed suit against Polymarket to block operations in the state.

The CFTC maintains that most event contracts qualify as swaps under the Commodity Exchange Act, placing them under federal jurisdiction. Several states counter that operators violate local gambling laws and avoid taxation. Gaming and sports betting attorney Daniel Wallach said in a post on X on Wednesday: “If the interim rule goes beyond the title’s suggestion (e.g., excluding casino-style products) and provides tacit authorization for sports-event contracts, it could prompt immediate APA litigation in federal court.”

Where the Risk Lies for Market Participants

The interim final rule on casino-style products could take effect immediately upon publication, bypassing standard notice-and-comment procedures. This procedural path carries litigation risk under the Administrative Procedure Act if the rule extends into sports-event contracts. The CFTC has also submitted separate crypto rules for review and issued guidance on mention markets vulnerable to manipulation.

These proposals do not immediately alter the landscape. They do, however, signal the agency’s push to codify federal authority while litigation produces split outcomes across jurisdictions. Operators must track the White House review, the commission vote, and any Supreme Court action for shifts in the balance between federal swaps regulation and state gaming enforcement.

Reporting: World Casino News

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