The Commodity Futures Trading Commission has drawn a formal line between prediction markets and gambling, claiming the first for itself and leaving the second outside federal derivatives law.
The agency issued two measures on Friday. One is a proposed rule that would expressly add event contracts, including those tied to sports, politics, cultural events and weather, to the legal definition of a “swap.” The other is an interim final rule, effective as soon as it is published, that excludes casino-style gambling, including sportsbook wagers and casino games, from that definition.
What the CFTC is claiming
CFTC Chairman Michael Selig said event contracts are “commodity derivatives squarely within the CFTC’s regulatory remit under the Commodity Exchange Act.” He also said they fall within the agency’s exclusive jurisdiction.
That claim matters most for platforms such as Kalshi and Polymarket. If event contracts are federally regulated swaps, state gambling regulators would have far less room to treat them as illegal betting. Several states have sued prediction market operators, and the CFTC has countersued.
Where it stops
The other half of the package marks out what the CFTC does not want. “Casino-style gambling products are not derivatives,” Selig said, describing the interim rule as clarifying the limits of the agency’s remit. That part codifies a view the CFTC has long held, and it takes effect immediately.
In practice, the CFTC is separating event contracts traded on a regulated exchange from bets placed with a sportsbook or casino. The first would sit with the CFTC. The second stays with state gambling law.
What happens next
Both measures are open for 30 days of public comment. They formalise proposals the CFTC sent to the White House for review in late September.
The courts may still decide the outcome. Judges are split on whether event contracts count as federally regulated swaps, with the NFL among those on one side and Kalshi on the other, and the Supreme Court has taken an interest in the question.
