US CFTC Proposes to Bring Prediction Market Event Contracts Under Swaps Regulation, Seeking Federal Regulatory Authority

BlockBeats news, October 10: The U.S. Commodity Futures Trading Commission (CFTC) on Friday issued an interim final rule and proposed another new rule, seeking to further establish its regulatory authority over prediction markets. Under the new proposal, event contracts on sports, politics, culture, and weather traded on platforms such as Kalshi and Polymarket would be brought under the existing U.S. swaps regulatory framework, with the CFTC responsible for oversight; casino-style gambling would be excluded from the definition of swaps.

The two rules differ in legal effect and stage of advancement: the interim final rule has taken effect immediately but is still open to public comment; the other rule, which explicitly includes event contracts in the definition of swaps, remains at the proposal stage, with a 30-day public comment period.

The move comes as the CFTC is engaged in legal disputes with multiple states over regulatory authority concerning prediction markets. The states involved argue that some sports event contracts are essentially gambling operations and should be subject to state-level gambling regulations; CFTC Chairman Mike Selig maintains that such contracts are financial derivatives under the jurisdiction of the federal agency. The dispute between the two sides has been submitted to the U.S. Supreme Court, and recent rulings by federal appellate courts have also shown divisions. The new rules could serve as an important basis for the CFTC to support its regulatory position in subsequent litigation.