The CFTC’s recent actions aim to counter the notion that event contracts constitute gambling by providing a clearer definition of swaps—regulated financial instruments where two parties agree to exchange value. The agency proposes to expand the swap definition to cover event contracts traded on platforms such as Kalshi, Polymarket, Crypto.com, and Robinhood. Simultaneously, it is pursuing an interim final rule that would exclude casino‑style gambling products from qualifying as swaps.
Both proposals were submitted to the Office of Management and Budget this week, a step that typically precedes public comment. An interim final rule, if adopted, would take effect immediately while remaining subject to further feedback and possible revisions.
Should the CFTC classify event contracts as swaps—and determine that those swaps are not gambling products—the legal basis for numerous state lawsuits against prediction‑market operators, most notably Kalshi, which accuse them of running illegal gambling platforms, could be weakened.
The CFTC has been actively involved in these litigation efforts, frequently filing suits against states to uphold Chairman Mike Selig’s assertion that the agency holds exclusive authority over prediction markets. Divergent rulings from federal appellate courts have emerged, raising the prospect that the U.S. Supreme Court may ultimately need to resolve the dispute.
