CFTC Moves to Classify Prediction Market Contracts as Swaps After Court Setbacks

The CFTC has sent two rule proposals to the White House’s OMB, dated Sept. 28. One would widen the definition of swaps to include event contracts traded on Kalshi, Polymarket, Crypto.com and Robinhood. The other, an interim final rule, would take “casino-style gambling products” out of what counts as a swap. It would take effect immediately but stay open for comment. The agency says neither is “economically significant.”

Kalshi Court Rulings and the State Gambling Fight

Split Between Federal Appeals Courts

Last week, the Sixth and Eighth Circuits ruled that Kalshi’s sports contracts are not swaps and fall under state gambling laws. The Third Circuit went the other way and backed CFTC jurisdiction. This split makes a Supreme Court showdown more likely.

Impact on State Lawsuits

If event contracts are swaps and swaps are not gambling, states could lose ground in their suits accusing platforms like Kalshi of running illegal gambling. Chairman Mike Selig argues the CFTC alone governs prediction markets, and the agency has sued states to defend that view.

CFTC Leadership and Crypto Rulemaking

Selig is the only sitting commissioner because President Trump has not nominated others, so he acts alone. The agency also sent a separate crypto “prerule” to the White House.