CFTC seeks to define prediction markets as swaps in new rule filings

The Commodity Futures Trading Commission is moving to lock in its authority over prediction markets, sending the White House two rules that would redraw the legal definition of a "swap" around event contracts, the yes-or-no wagers traded on platforms like Kalshi and Polymarket.

The regulator submitted both proposals to the Office of Information and Regulatory Affairs, the White House arm that reviews federal rules before publication, on Sept. 28.

The first, a proposed rule identified as RIN 3038-AF82, would further define the term "swap" to explicitly include event contracts and will head to public comment. The second, an interim final rule (RIN 3038-AF81), would exclude "casino-style gambling products" from the swap definition and could take effect upon approval. The CFTC classified both as not economically significant, and their full text isn't yet public.

The "swap" label is the crux of a fierce jurisdictional fight. If event contracts are swaps, they fall under the CFTC's authority, which Chairman Michael Selig has argued is exclusive, placing the platforms beyond the reach of state gambling regulators.

Multiple states have sued prediction-market operators alleging illegal gambling, and the CFTC has countersued to block that oversight. The rulemaking follows a string of conflicting appeals-court decisions over whether the contracts qualify, a split now drawing the Supreme Court's attention.

The move extends a broader pattern of the CFTC pressing ahead with its own rules rather than waiting on Congress, part of a post-Clarity Act shift toward regulators setting crypto policy. The agency recently sent a separate crypto-markets rulemaking to the White House, while its staff warned that "mention" contracts tied to public statements invite manipulation.

Meanwhile, regulator scrutiny continues to mount, even at the federal level. The CFTC is investigating former Rep. Adam Kinzinger over Kalshi bets tied to his own pardon. The Commission also sent out an advisory earlier this week warning against "mention markets," suggesting prediction market contracts settling on whether a named person says certain words should be presumed readily susceptible to manipulation.

And at the state level, New York last week sued Polymarket with the aim of banning it within its jurisdiction, echoing an earlier action against Kalshi.

For now, the CFTC’s filings signal intent, not final rules. But by seeking to write the swap definition itself, the CFTC is attempting to settle in regulation what courts and states have been fighting over case by case.