The US Commodity Futures Trading Commission has sent two regulatory proposals on prediction markets to the White House for review. The Office of Information and Regulatory Affairs is examining the documents before final rules are published. The first proposal expands the definition of a swap to include event contracts; the second removes casino products from CFTC jurisdiction.
The federal regulator's position: contracts on platforms like Kalshi and Polymarket, including sports, fall under federal oversight. States disagree — they argue some products violate local gambling laws, including age requirements and tax rules. The prediction market has grown to tens of billions of dollars, covering sports, entertainment and corporate events.
The casino-product proposal has reached interim final rule status. Attorney Daniel Wallach warned this status allows the measure to take effect without standard public comment procedures, raising the risk of lawsuits under the Administrative Procedure Act.
A federal appeals court allowed Ohio and Tennessee to apply state betting laws to Kalshi, rejecting the platform's argument that federal law protects it. New Jersey Attorney General Jennifer Davenport has asked the Supreme Court to review the case. CFTC Chair Michael Selig publicly disputes with states: the agency says state actions threaten the national market, states insist gambling laws apply.
Wallach warned that if the final rule goes beyond excluding casino products and effectively legitimises sports event contracts, federal lawsuits will follow immediately. White House review is procedural, not a verdict. Platforms, states and the CFTC are waiting to see whether the proposals will draw a clear line between derivatives oversight and gambling law or leave it to the courts.
