The U.S. Commodity Futures Trading Commission has taken a new step to anchor prediction market contracts inside federal derivatives law, issuing an interim final rule alongside a separate proposal that would classify event contracts as swaps.

The move reflects Chairman Mike Selig’s view that these products should be regulated by the CFTC rather than by state gambling authorities. If adopted as envisioned, the approach would extend the agency’s oversight of contracts tied to sports, politics, culture, and weather, including products traded on platforms such as Kalshi and Polymarket.

Two actions aimed at the same regulatory goal

The CFTC’s latest action comes in two parts. First, an interim final rule states that casino-style gambling does not fit within the legal definition of a swap. At the same time, it clarifies that event contracts do fall within that definition, placing them under the agency’s jurisdiction.

Second, the commission released a proposal that would incorporate those event contracts into the existing body of swap regulations. That proposal is subject to a 30-day public comment period, giving market participants and other interested parties a limited window to respond before the agency decides how to proceed.

Prediction markets at the center of the dispute

The rulemaking effort is aimed squarely at contracts used by prediction market platforms. The article identifies contracts based on sports, politics, cultural events, and weather as examples of products the CFTC considers event contracts rather than ordinary gambling activity.

That distinction matters because firms such as Kalshi, along with similar platforms, have argued that the CFTC should be their sole regulator. Under the commission’s current approach, those markets would be treated as federal derivatives activity, not as wagering that states can regulate on their own terms.

Court fights continue over state and federal authority

The agency’s action arrives while legal challenges over prediction markets are still unfolding. Supporters of the CFTC’s approach say the new rule and proposal strengthen the commission’s position as states dispute whether federal regulators have primary authority over these contracts.

Opponents, including several states and former federal officials, maintain that state governments still have authority over the kinds of wagering taking place on these platforms. Courts have not spoken with one voice on the issue, with related cases producing mixed rulings.

What comes next

The interim final rule is intended in part to improve the CFTC’s standing in ongoing litigation over whether prediction markets belong under federal regulation. The companion proposal goes further by seeking to explicitly place event contracts within the swap rule framework after public input is collected.

If the dispute ultimately reaches the U.S. Supreme Court, the commission could point to its ongoing implementation of Chairman Selig’s regulatory approach as part of its legal argument. For now, the next confirmed step is the 30-day comment period on the proposed rule, which will shape how formally and how broadly event contracts are folded into existing swap regulations.

Source: www.coindesk.com