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CFTC moves to define event contracts as swaps in prediction market fight

The US derivatives regulator issued an interim final rule and proposed another to place event contracts under swaps rules, as several states challenge its authority in court.

Why it matters: The CFTC's push to classify event contracts as swaps could decide whether prediction market platforms such as Kalshi and Polymarket fall under federal oversight or state gambling regulators.

InvestIn.News NewsDesk · 1 min read
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Original reporting: Jesse Hamilton, CoinDesk

Key points

  • The CFTC issued an interim final rule on Friday that keeps casino-style gambling outside the swaps definition.
  • A related proposal would fold event contracts on sports, politics, culture and weather into existing swaps regulation, with a 30-day comment period.
  • States have submitted views to the US Supreme Court, and recent federal appellate rulings have gone both ways.

The US Commodity Futures Trading Commission is moving to define event contracts as swaps, formalising its claim to sole authority over prediction markets. The agency issued an interim final rule on Friday and proposed a related rule, according to CoinDesk. The interim rule takes effect immediately but remains open to public input, while the proposal carries a 30-day comment period.

The interim rule sets out which sports wagering falls outside the swaps definition, keeping casino-style gambling beyond the agency's reach. CFTC chairman Mike Selig has argued prediction markets belong to his agency alone.

Several states are suing the regulator, insisting they hold authority over sports betting on the platforms, which many accuse of running illegal gambling operations. Recent court decisions have gone both ways, including one federal appellate ruling against the states and two supporting them. States and former federal officials have submitted their views to the US Supreme Court, which has been asked to resolve the issue.

Selig is the lone commissioner on the five-member commission, and President Donald Trump has not named additional members.

What to watch: The proposed rule has a 30-day comment period, and the US Supreme Court has been asked to resolve the dispute between the CFTC and the states.

Read the full story on CoinDesk

Live updates on NewsFeeds:RegulationDesk editor: Keshav Aggarwal (accountable for this page; this summary was not edited by hand)

How this was produced: an AI model wrote this summary of CoinDesk’s report, which we credit and link above. Read our Editorial and AI policy. Spotted a mistake? See Corrections.

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