The CFTC advanced two measures affecting prediction markets, a move Nevada Gaming Control Board Chairman Mike Dreitzer said he expected as federal and state authorities dispute who should oversee sports-event contracts. CDC Gaming reported his comments during an Indian Gaming Association webinar.
Two measures set out different boundaries
One proposed rule would broaden the federal definition of a swap to include event contracts tied to culture, weather, politics and sports. A separate interim final rule, effective upon publication in the Federal Register, confirms the CFTC’s stated position that casino-style gambling products-including sportsbook wagers and casino games-are outside that definition.
The distinction is central to the disagreement: the agency’s measures would bring specified event contracts within its federal framework while drawing a line around traditional gambling. ReadWrite has also covered the CFTC’s proposed prediction-market framework, which addresses that boundary between federal oversight and state gambling regulation.
The same Friday the CFTC advanced the measures, Kalshi filed for a rehearing in its Sixth Circuit case involving regulators in Ohio and Tennessee. The appeals court had unanimously ruled against the company, finding that prediction markets were not exempt from state gambling laws, including tax requirements. The rehearing filing seeks another look at that ruling; it does not change the result already issued by the court.
Dreitzer disputes the distinction
Dreitzer argued that a sports-event contract and a conventional sportsbook wager are functionally alike. He pointed to the example of a $10 bet on the New York Giants compared with a $10 contract tied to a sports event, saying the CFTC’s effort to distinguish the two does not reflect how they work in practice.
His criticism also addressed arguments that prediction markets differ because they are peer-to-peer, support price discovery or let customers enter and exit positions. Dreitzer said those features do not make the products different from sports betting, noting that traditional online sportsbooks also allow customers to cash out. He further questioned whether the markets are genuinely peer-to-peer when financial firms or other exchanges can take the opposite side of a casual trader.
Dreitzer is a lawyer and former senior executive at Gaming Arts and Ainsworth Game Technology. His position reflects Nevada’s concern that sports-event contracts should face state gambling oversight when they operate like sportsbook bets. That dispute is also central to Nevada’s scrutiny of sports prediction markets.
Federal and state positions remain contested
The CFTC’s rules present a different regulatory line: certain event contracts would qualify as swaps, while casino-style products would not. Dreitzer rejects the practical distinction between those event contracts and sports wagers, making clear that Nevada’s regulator does not view federal treatment as settling the state’s gambling-law questions.
For Kalshi, the Sixth Circuit decision leaves the company subject to state gambling rules, including taxes, in the dispute before that court unless the ruling is changed. The company’s rehearing request is the immediate next procedural step described in the report. The CFTC measures, meanwhile, address the federal classification of event contracts and casino-style gambling; the available account gives no comment deadline or schedule for a final rule.
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