As the CFTC engages in a legal battle with states over prediction markets, it has submitted two rules regarding swaps definitions for review by the White House.
By Jesse Hamilton|Edited by Nikhilesh DeSep 30, 2026, 11:19 a.m. EDT3 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on Mike Selig, Chairman of the CFTC, is advancing rules that could intensify the conflict over event contracts. (Jesse Hamilton/CoinDesk)SummaryShow- The Commodity Futures Trading Commission is pushing for regulatory changes to recognize prediction market event contracts as “swaps,” distancing them from gambling classifications.
- This stance could challenge state assertions that platforms like Kalshi operate outside regulatory bounds, potentially conflicting with recent federal court decisions.
The U.S. derivatives regulator has forwarded two new rules to the White House's Office of Management and Budget for assessment. One rule aims to classify event contracts under the definition of swaps, while the other seeks to clarify that these contracts are not gambling-related. This initiative comes amid ongoing disputes with states regarding the regulatory oversight of these financial products.
The CFTC has positioned itself as the primary federal authority overseeing prediction markets, which involve binary yes-or-no bets on events like sports outcomes and elections. In this context, the agency is actively working to regulate markets such as Kalshi, while countering state claims that they possess the authority to regulate these contracts as gambling.
A recent federal court ruling determined that contracts linked to sports on Kalshi do not qualify as swaps and fall under state gambling laws, even though earlier rulings had suggested otherwise.
The CFTC's latest actions aim to challenge this interpretation by refining the definition of swaps, which are regulated instruments where two parties agree to exchange financial benefits. The agency is proposing a new rule to include event contracts as swaps, applicable to well-known platforms like Kalshi, Polymarket, Crypto.com, and Robinhood, while also introducing an "interim final rule" to exclude "casino-style gambling products" from the swap category.
These proposals are currently under review by the OMB, a standard procedure before rules are made available for public commentary. An interim final rule would be effective immediately but still open to public feedback and adjustments.
If event contracts are deemed swaps and not classified as gambling products, this could significantly weaken the states' legal arguments against prediction market operators, particularly Kalshi, who are accused of running illegal gambling operations.
The CFTC has been actively involved in defending its jurisdiction in these lawsuits, frequently taking legal action against states asserting their regulatory authority. This situation has led to varying decisions from federal appellate courts, raising the possibility that the U.S. Supreme Court may eventually have to address the issue.
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State of CryptoExamining the intersection of cryptocurrency and government.PreviewSign upBy signing up, you will receive emails about CoinDesk products and you agree to our terms & conditions and privacy policy.Recently, the U.S. Sixth Circuit Court of Appeals ruled that sports bets on Kalshi are not swaps, a decision echoed by the Eighth Circuit Court of Appeals. In contrast, the Third Circuit upheld the CFTC's jurisdiction over prediction markets, creating a legal divide at the federal level.
While the CFTC's recent submissions to the White House, dated September 28, lack specific details about the proposed rules, the agency indicated that neither rule is considered "economically significant."
Although the CFTC is intended to operate as a five-member commission, President Donald Trump has yet to nominate additional commissioners, leaving Selig to manage decisions independently.
OMB documents also reveal that the CFTC has sent a "prerule" regarding cryptocurrency regulations to the White House, though the specifics of this initiative remain undisclosed.
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