CFTC Proposes Federal Swap Rules for Prediction-Market Contracts

The Commodity Futures Trading Commission proposed rules to classify event contracts as federally regulated swaps, setting up a new fight over whether prediction markets fall under federal or state jurisdiction.

The first proposal would add event contracts tied to sports, political contests, cultural events and climate outcomes to the definition of swaps under the Commodity Exchange Act. The CFTC said the contracts are already commonly treated as swaps in trading markets.

A second proposal would exclude sports betting and casino-style games from the swap definition. CFTC Chairman Michael Selig said those products are gambling rather than derivatives and should remain outside the agency’s oversight.

Both proposals include 30-day public comment periods. The framework would place qualifying prediction-market contracts under a federal derivatives regime while leaving traditional gambling products to state authorities.

The proposals come as states challenge prediction-market platforms including Kalshi and Polymarket over alleged illegal gambling. Conflicting federal appeals court decisions have intensified the dispute over whether federal law overrides state restrictions, raising the possibility of Supreme Court review.