CFTC Moves to Define Prediction Markets as Swaps Amid Jurisdiction Battle
The Commodity Futures Trading Commission is moving to write its claim of authority over prediction markets directly into federal regulations. The CFTC sent the White House two proposed rules Monday (Sept. 28) that could strengthen its hand in an escalating jurisdictional fight with state gambling regulators, Decrypt reported Wednesday (Sept. 30). The two measures, submitted […] The post CFTC…
The Commodity Futures Trading Commission (CFTC) has submitted two proposed rules to the White House in an effort to define prediction markets as swaps, which could strengthen its position in a jurisdictional conflict with state gambling regulators. These measures aim to reshape the regulatory definition of a "swap" around event contracts, instruments traded on prediction market platforms such as Kalshi and Polymarket.
One proposal would explicitly include event contracts in the swap definition, while the other would exclude "casino-style gambling products" from that definition. The CFTC contends that the agency has exclusive jurisdiction over federally regulated prediction markets, while states argue that sports-related event contracts are gambling subject to their traditional police powers.
The proposed rules come after the Sixth Circuit Court of Appeals ruled against the federal position, stating that Kalshi's sports event contracts do not qualify as swaps under the Commodity Exchange Act and are therefore outside the CFTC's exclusive jurisdiction. The outcome of this legal battle remains uncertain, with the possibility of further Supreme Court review.
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