CFTC moves to classify event contracts as swaps, not gambling

The U.S. Commodity Futures Trading Commission has sent two rules to the White House Office of Management and Budget that would fold prediction-market event contracts into the regulatory definition of swaps and exclude "casino-style gambling products" from what counts as a swap. Both submissions, received by the OMB on September 28, are part of the agency's fight with states over whether platforms like Kalshi are running unregulated gambling.

If event contracts are swaps — and swaps are not gambling — the definitions could undercut state lawsuits against prediction markets including Kalshi, Polymarket, Crypto.com and Robinhood. The move follows federal court rulings split on the question: the Sixth and Eighth Circuits said Kalshi's sports contracts fall under state gaming law, while the Third Circuit backed CFTC jurisdiction. Chair Mike Selig, acting as the commission's lone member, has argued the CFTC holds exclusive authority over prediction markets.