- The CFTC issued a proposed rule Friday that would expand the “swap” definition to include event contracts tied to sports, politics, cultural events, and weather.
- An interim final rule, effective immediately, explicitly excludes casino-style gambling products like sportsbooks and casino games from the swap definition.
- Chairman Michael Selig said event contracts are “commodity derivatives squarely within the CFTC’s regulatory remit,” while “casino-style gambling products are not derivatives.”
- The rules formalize proposals sent to the White House last month, as the agency asserts authority amid state lawsuits and a potential Supreme Court fight.
The Commodity Futures Trading Commission pressed its claim over prediction markets Friday, issuing a proposed rule that would formally define event contracts as “swaps” under federal law while carving out traditional gambling. The first measure expressly expands the definition of “swap” to include contracts tied to sports, politics, cultural events, and weather, resolving any ambiguity about their legal status. Chairman Michael Selig stated these products are “commodity derivatives squarely within the CFTC’s regulatory remit under the Commodity Exchange Act” and fall under the agency’s exclusive jurisdiction.
The second measure, an interim final rule effective immediately upon publication, codifies the opposite line by excluding casino-style gambling products including sportsbook wagers and casino games. Selig framed the step as clarifying “the limits of its regulatory remit,” noting that such products are not derivatives. Both rules carry 30-day public comment windows and formalize proposals the agency sent to the White House for review late last month.
Together, the two rules sharpen a distinction at the heart of a fierce jurisdictional fight: if event contracts are swaps, they fall under CFTC authority, placing platforms like Kalshi and Polymarket beyond state gambling regulators. Multiple states have sued prediction-market operators alleging illegal gambling, and the CFTC has countersued to defend its turf. The legal stakes are climbing as a court split over whether event contracts qualify as federally regulated swaps has drawn the Supreme Court’s attention, meaning the question the CFTC is now trying to settle in regulation may ultimately be decided by the justices. The agency has broadly taken a pro-industry approach toward both traditional and cryptocurrency markets, recently issuing no-action relief letting crypto apps offer regulated derivatives.
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