The U.S. Commodity Futures Trading Commission has established one rule and introduced another proposal to reinforce Chairman Mike Selig’s stance that prediction market transactions should be regulated exclusively by his agency.
This newest policy action aims to more clearly categorize event contracts as “swaps,” potentially strengthening the regulator’s legal standing in an ongoing conflict with multiple states where federal court decisions have already gone against the CFTC.
The CFTC is actively working to outline which categories of sports wagers do not qualify as swaps—which are contractual agreements between entities falling under federal regulatory jurisdiction—while simultaneously insisting that event contracts still meet the statutory definition of swaps and therefore remain under CFTC supervision.
An interim final rule released by the agency establishes that casino gambling will be excluded from the swap definition, whereas a related proposed rule maintains that event contracts fit squarely within that classification.
Because one rule holds “interim final” status, it takes effect right away while still accepting public feedback during implementation, whereas the alternative proposal—which explicitly incorporates event contracts covering sports, politics, culture, and weather, commonly traded on platforms like Kalshi and Polymarket, into existing swaps oversight—remains in a proposal phase featuring a brief thirty-day comment window.
A number of states and former federal officials who helped draft these statutes have contested the CFTC’s perspective, having already presented their arguments this week to the U.S. Supreme Court, which has been asked to settle the matter.
Should the CFTC be required to defend its position before the high court, the agency can now demonstrate that it has already started executing Chairman Mike Selig’s regulatory vision regarding prediction markets.
Several states are engaged in active litigation with the regulator, maintaining that they retain jurisdiction over the sports wagering occurring on these platforms, which numerous states have labeled as unauthorized gambling ventures.
Over the past few months, judicial outcomes have been mixed, encompassing one federal appeals court ruling that went against the states alongside two federal appellate decisions that favored them.
“We view this interim final rule as designed to improve the agency’s position in court as the states are arguing that the CFTC’s definition of a swap would make federally illegal any wager made at a state or tribal casino or sportsbook,” wrote Jaret Seiberg, a policy analyst at TD Cowen, in a Friday note to clients. “Whether this actually works is a different question.”
These measures had been forwarded for White House evaluation under two weeks ago, highlighting a notably rapid timeline, though the commission had substantial motivation to address legal challengers questioning its exclusive authority over prediction markets, part of which involved clarifying that casino gambling falls outside the CFTC’s purview.
Meanwhile, businesses such as Kalshi align with the agency, seeking to cement the CFTC as their sole oversight authority.
Selig, serving as the sole commissioner on a panel designed for five members, possesses the authority to unilaterally determine CFTC policies, as President Donald Trump has not appointed additional commissioners to the agency thus far.
A parallel scenario has unfolded at the Securities and Exchange Commission, where the five-seat panel currently functions with only two members, reflecting the Trump administration’s deliberate strategy to eliminate or reduce Democratic representation across regulatory bodies.
Originally published at https://www.coindesk.com/policy/2026/10/09/u-s-cftc-moves-to-fold-event-contracts-into-swaps-regulations-as-legal-fight-rages.
