U.S. CFTC Rules Could Shift Prediction Market Oversight From States - Blockonomi
by Maxwell Mutuma · BlockonomiTLDR
Table of Contents
- TLDR
- U.S. CFTC Seeks Broader Swap Definition
- Court Rulings Keep State Dispute Open
- Prediction Markets Face Wider Regulatory Scrutiny
- White House Review Comes Before Rule Release
- U.S. CFTC sent two prediction market rules to the White House for review.
- One proposal would place event contracts within the federal definition of swaps.
- A second rule would separate regulated swaps from casino-style gambling products.
- Federal courts remain divided over whether sports event contracts fall under CFTC authority.
- The rulemaking could reshape the legal battle between federal oversight and state gambling laws.
The U.S. CFTC has sent two prediction-market rules to the White House for review as it seeks clearer control over event contracts. The filings come while courts and states continue to dispute whether sports contracts fall under derivatives law or gambling rules.
U.S. CFTC Seeks Broader Swap Definition
OMB received both measures on September 28. One proposed rule would add event contracts to the federal definition of swaps. The second, an interim final rule, would exclude casino-style gambling products from that same definition.
The filings contain no full rule text yet. OMB lists neither action in its major economic category. The agency has updated guidance covering tokenized assets and blockchain records as it broadens work across digital markets.
Court Rulings Keep State Dispute Open
The Sixth Circuit ruled on September 25 that Kalshi’s sports-event contracts do not qualify as swaps under the Commodity Exchange Act. The court also found that federal law does not block Ohio and Tennessee from applying their gambling laws to those contracts.
That decision conflicts with the Third Circuit’s April ruling involving New Jersey. That court found Kalshi’s sports contracts were swaps on a federally regulated market and supported CFTC jurisdiction. The split has increased the chance that the Supreme Court may eventually review the issue.
Prediction Markets Face Wider Regulatory Scrutiny
The U.S. CFTC has repeatedly argued that it holds exclusive authority over federally regulated prediction markets. Chairman Michael Selig has backed that position in lawsuits and court filings involving several states. Kalshi also denied reports of a formal CFTC examination this month.
The agency opened a prediction-market rulemaking process in March and requested public comment on event contracts. The latest White House submissions move that effort closer to proposed rules that could define how federal derivatives law treats sports, election, and other outcome-based contracts.
White House Review Comes Before Rule Release
OMB review usually comes before agencies publish proposed rules for public comment. An interim final rule can take effect before the comment process ends, though regulators may later revise it. The CFTC also has broader crypto rules under White House review.
The new filings arrive as prediction markets grow across platforms including Kalshi, Polymarket, Crypto.com, and Robinhood. Any final rule will enter an unsettled legal environment, with federal appeals courts taking different positions on swaps and state gambling authority.