Inside The CFTC’s Plan To Redefine Prediction Market Betting

TLDR

• The CFTC sent two new rules to the White House for review tied to event contracts on prediction markets.
• One rule would classify event contracts as “swaps,” which fall under CFTC authority.
• A second rule would remove “casino-style gambling products” from the swap definition.
• The move comes after mixed federal court rulings on whether platforms like Kalshi fall under CFTC or state gambling law.
• CFTC Chairman Mike Selig is currently the agency’s only commissioner and is acting alone on these decisions.

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The U.S. Commodity Futures Trading Commission has sent two new rules to the White House for review. Both deal with how the agency defines event contracts used on prediction market platforms.

It’s OVER.

The SEC and CFTC are done waiting for the CLARITY Act.

Regulators have now made at least 9 moves to build crypto rules without Congress.

1. SEC Crypto Task Force
– define what is and is not a security

2. Project Crypto
– modernize SEC rules for onchain markets

3.… pic.twitter.com/wviv65MA7p

— Coin Bureau (@coinbureau) September 30, 2026

The CFTC wants to officially classify these event contracts as “swaps.” Swaps are financial products regulated by the CFTC, where two parties agree to an exchange based on an outcome.

A second rule would exclude “casino-style gambling products” from that same swap definition. Together, these two moves aim to separate prediction markets from gambling law entirely.

Why The CFTC Is Pushing These Rules

Event contracts are simple yes-or-no bets on measurable outcomes. People use them to bet on things like elections or sports results.

Platforms such as Kalshi, Polymarket, Crypto.com, and Robinhood offer these contracts to users. The CFTC has positioned itself as the main federal regulator over these platforms and the products they offer.

States have pushed back. Many argue that sports-related event contracts should fall under state gambling laws instead of federal oversight.

This disagreement has led to lawsuits across multiple states. Kalshi, in particular, has been accused in several states of running an illegal gambling operation.

Court Rulings Have Been Mixed

Federal courts have not agreed on how to classify these contracts. The Sixth Circuit Court of Appeals ruled last week that Kalshi’s sports contracts are not swaps.

The Eighth Circuit Court of Appeals reached a similar conclusion. Both courts said these contracts fall under state gambling rules.

But the Third Circuit Court of Appeals ruled differently. It found that the CFTC does have proper jurisdiction over these markets.

This split between courts means the issue remains unsettled at the federal level. Legal experts have suggested the U.S. Supreme Court may eventually need to decide the matter.

Both rules submitted this week are under review at the White House Office of Management and Budget. This review step usually comes right before a rule opens for public comment.

The interim final rule would take effect right away. It would still remain open for public input and possible changes after that.

The CFTC has not released detailed text of either rule yet. The agency has only said neither rule is considered “economically significant” in its filing.

CFTC Chairman Mike Selig has been acting as the agency’s only commissioner. President Trump has not yet nominated additional members to fill the remaining seats.

This means Selig has been making regulatory decisions without input from other commissioners. The agency is structured to have five members under normal circumstances.

Separate from these two rules, the CFTC has also submitted a “prerule” focused on crypto regulation. The agency has not shared specific details about what that prerule will cover.

The outcome of these rule changes could affect ongoing lawsuits between the CFTC and several states. If event contracts become legally defined as swaps and not gambling, it may weaken the states’ legal arguments in current cases.