The Commodity Futures Trading Commission has sent two rule proposals to the White House Office of Management and Budget, seeking to bring prediction markets under federal authority. Both documents went to the Office of Information and Regulatory Affairs this week and have not yet been published.
The first proposal (RIN 3038-AF82) would expand the definition of a swap to include event contracts — yes/no products traded on platforms such as Kalshi and Polymarket. It will go through public comment before adoption. The second (RIN 3038-AF81) is an interim final rule excluding casino products from the swap definition. It can take effect immediately after approval, without a full rulemaking cycle.
If event contracts fall under the Commodity Exchange Act, they would be regulated by the CFTC rather than state authorities. CFTC Chair Michael Selig has argued that federal jurisdiction is exclusive. Several states dispute that claim. Ohio and Tennessee have sued the agency, accusing platforms of violating local gambling laws. New York filed suit against Polymarket last week, seeking to bar the platform from operating in the state, similar to earlier action against Kalshi. New Jersey's attorney general has asked the Supreme Court to settle the jurisdictional question after conflicting rulings in appellate courts.
The CFTC is moving ahead without waiting for Congress. In June the agency published draft rules for assessing event contracts tied to gaming activity. On 22 September it issued guidance on "mention markets" — contracts that settle based on whether a named person says specific words. The CFTC warned that such products carry a high risk of manipulation and should be treated as vulnerable by default. The agency is also investigating former congressman Adam Kinzinger's trades on Kalshi relating to his own potential pardon.
Kalshi and Polymarket are registered with the CFTC as designated contract markets. Crypto.com and Robinhood offer similar products. Both rule proposals still require approval, but a Supreme Court ruling could reshape the entire framework regardless of regulatory guidance.
