CFTC Moves to Classify Prediction Market Contracts as Swaps Amid State Pushback

TLDR

• The CFTC issued an interim final rule and proposed a new rule to classify event contracts as swaps under its jurisdiction.
• Casino-style gambling products are excluded from the swap definition under the new interim rule.
• The proposed rule covers event contracts based on sports, politics, culture, and weather.
• States and former officials have objected and brought the matter to the Supreme Court.
• Companies like Kalshi and Robinhood support the CFTC’s claim to exclusive oversight.

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The Commodity Futures Trading Commission has taken new steps to secure its authority over prediction markets. On Friday, the agency issued an interim final rule and proposed a separate rule change. Together, they aim to classify event contracts as swaps, a category of financial product under CFTC oversight.

NEW: CTFC says prediction market-style blackjack, roulette, poker, etc. will not be allowed.

Interesting timing. Was a platform itching to make the leap here? Is this a sign that the CFTC is feeling some public pressure amid the online gambling epidemic? pic.twitter.com/7gjoUFtIZU

— Brian Pempus (@brianjpempus) October 9, 2026

Event contracts let people bet on the outcome of sports games, elections, cultural events, and weather. Platforms such as Kalshi and Polymarket offer these contracts to the public. The CFTC says these products fall under its authority because they count as swaps under existing law.

What the New Rules Say

The interim final rule takes effect right away. It defines casino-style gambling products as separate from swaps, meaning they stay outside CFTC jurisdiction. This includes wagers placed at casinos and sportsbooks.

The second rule is still a proposal. It would formally classify event contracts, including those tied to sports, as swaps under the Commodity Exchange Act. The public has 30 days to comment before any final decision is made.

CFTC Chair Mike Selig has pushed this view throughout his time leading the agency. He currently serves as the only commissioner on what is meant to be a five-person commission. President Trump has not named other commissioners to fill the remaining seats.

A similar staffing gap exists at the Securities and Exchange Commission, where only two of five seats are filled. The Trump administration has worked to reduce the number of Democrats serving on these regulatory bodies.

States Push Back in Court

Several states argue that event contracts tied to sports are simply sports bets. They say state regulators, not the CFTC, should oversee them. Multiple states have accused prediction market platforms of running illegal gambling operations.

New York has sued Polymarket over this issue. Courts have issued mixed rulings so far. The Ninth and Sixth Circuit Courts of Appeals ruled against prediction markets, saying sports contracts count as sports bets.

The Third Circuit Court of Appeals ruled the opposite way. That court said the CFTC has exclusive jurisdiction and that event contracts are swaps. These conflicting rulings have pushed the issue toward the Supreme Court.

This week, several states and former federal officials submitted their views to the Supreme Court. They are asking the court to resolve the jurisdiction question. Data from Polymarket shows only a 31% chance the Supreme Court takes up a sports-event contract case by year-end.

Policy analyst Jaret Seiberg of TD Cowen said the interim rule may help the CFTC’s legal position. He noted it could counter arguments that the CFTC’s swap definition would make state-regulated betting illegal. He added that whether this strategy works remains uncertain.

The NFL has filed a brief supporting New Jersey’s petition to the Supreme Court. The league is seeking clarity on how these platforms should be regulated. Robinhood has taken the opposite stance, filing its own petition supporting the CFTC’s exclusive authority.

These rule changes were submitted for White House review less than two weeks ago. That is a fast turnaround for federal rulemaking. The timing suggests the CFTC wanted its position formalized before further court action.