CFTC Moves to Treat Prediction Market Event Contracts as Swaps

The Commodity Futures Trading Commission took a formal step Friday toward claiming sole oversight of prediction markets. It issued one rule and proposed another, both aimed at placing event contracts under federal swaps law, outside the reach of state gambling regulators. This reflects the view of Chairman Mike Selig, who argues the agency alone should regulate platforms such as Kalshi and Polymarket.

Interim Final Rule on Sports Wagering

The first rule is an interim final rule, meaning it takes effect immediately while still open to public comment. It defines which sports wagers do not count as swaps and keeps casino style gambling outside the swap definition.

The second is only a proposal, with a short 30-day comment period. It would explicitly bring event contracts tied to sports, politics, culture and weather into existing swaps regulation.

Legal Fight With States Over Prediction Markets

Many states and former federal officials oppose the CFTC’s reading and have filed views with the U.S. Supreme Court, which has been asked to settle the issue. Several states are suing the agency and accuse these platforms of running illegal gambling. Recent appellate rulings have split, with one siding against the states and two backing them.

TD Cowen analyst Jaret Seiberg said the rule seems designed to strengthen the agency’s court position, since states argue the CFTC’s definition could make casino and sportsbook wagers federally illegal. Whether it works, he said, is another question.

Selig is the only commissioner on a body meant to have five, so he can set policy himself. President Donald Trump has not named other members, and the SEC faces a similar shortage, with only two of five seats filled.