The Commodity Futures Trading Commission has issued two measures that would define which prediction-market contracts fall under federal derivatives rules and which remain gambling products overseen by states. The agency says event contracts are within its exclusive authority under the Commodity Exchange Act, a position that puts the rulemaking at the center of an ongoing jurisdictional fight, as the CFTC’s effort to clarify event-contract oversight shows.
One measure would expand the definition of a swap to include contracts tied to cultural events, weather, politics and sports. The CFTC says these products are commonly treated as swaps in trading markets and that the rule would resolve uncertainty about their status under federal law.
The second measure is an interim final rule that excludes casino-style gambling, including sportsbook wagers and casino games, from the swap definition. It takes effect upon publication in the Federal Register. Both measures have 30-day comment periods, and the filings were sent to the White House Office of Information and Regulatory Affairs on September 28 before their release on Friday, October 9.
The distinction matters because the CFTC’s position is that qualifying event contracts are commodity derivatives within its exclusive jurisdiction. States, by contrast, argue that prediction markets fall under state gambling authority. A formal swap classification could strengthen the federal agency’s position, but it does not by itself settle whether federal oversight prevents states from applying their gambling laws to contracts traded on exchanges.
That unresolved question is already before the courts. The CFTC’s move comes amid a split between the Third and Ninth Circuit Courts of Appeals over whether event contracts qualify as federally regulated swaps, a disagreement that has placed Kalshi, Polymarket and other prediction-market firms in disputes with state authorities.
New Jersey has asked the Supreme Court to consider a case involving Kalshi. Gaming regulators from 39 states and the District of Columbia joined the NFL in urging the justices to take up the dispute. The court’s consideration of the petition gives the rulemaking a parallel track: the CFTC is seeking to put its interpretation into regulation while the broader authority question remains contested in court.
States and the NFL press their case
The NFL supports New Jersey’s request for Supreme Court review and argues that states are better positioned to oversee sports-related contracts under current conditions. Its lawyers warned that, without a decision from the court, operators could take advantage of the divide between federal and state rules, putting consumers and the integrity of sports events at risk.
The league’s position reflects the practical stakes of the dispute: states say prediction-market products belong within their regulatory remit, while the CFTC says qualifying contracts are derivatives under federal law. State officials’ challenge to federal oversight is part of the wider conflict over how these markets should be regulated.
The measures draw a line between event contracts that the agency would treat as swaps and conventional gambling products it would exclude. That boundary could shape how prediction-market operators structure their offerings and defend them against state enforcement, but it does not resolve whether states can regulate contracts on federally overseen exchanges. The dispute extends beyond the classification question to the reach of federal authority, as the federal-state battle over prediction-market rules continues.
Comment periods and court review ahead
The next administrative step is the close of the two 30-day comment periods. The CFTC can then consider the submissions as it decides whether to revise, finalize or withdraw the proposed approach; the interim final gambling exclusion is effective upon publication in the Federal Register.
Separately, the Supreme Court must decide whether to hear New Jersey’s petition. The CFTC is seeking to formalize its view of event contracts before that litigation produces further guidance, but the proposals do not settle the courts’ separate question of how federal rules interact with state gambling laws.
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