Currently, the White House is reviewing two regulatory submissions from the Commodity Futures Trading Commission concerning prediction markets, as the authority attempts to cement its oversight despite opposition from state governments.
The CFTC submitted two proposals to the Office of Information and Regulatory Affairs (OIRA), an agency within the Office of Management and Budget that examines federal rules prior to publication, with the goal of broadening the swap definition to encompass event contracts while explicitly excluding casino-type gambling offerings.
Prediction markets such as Polymarket and Kalshi currently command valuations in the tens of billions of dollars, enabling participants to wager on numerous occurrences ranging from upcoming corporate initial public offerings to elimination results on television programs like Dancing with the Stars.
These platforms additionally feature sports wagers, forming a central point of contention currently moving through judicial channels regarding whether such instruments satisfy the legal criteria of a “swap.” The CFTC maintains that the vast majority of prediction market agreements, including sports-based ones, constitute swaps and consequently fall under its federal purview.
Conversely, state authorities contend that these entities function unlawfully within their borders, breach gambling laws, point out inadequate age restrictions, and argue that they evade tax obligations. Several states have initiated legal proceedings against certain venues, prompting the CFTC to push back by filing counter-actions designed to halt state-level supervision over prediction markets.
Last week, Kalshi suffered an appeal defeat after a federal appeals court ruled that Ohio and Tennessee possess the authority to enforce their respective sports gaming regulations against the platform, dismissing its contention that federal statutes protect its sports instruments and mandate CFTC regulation instead.
This matter may ultimately reach the Supreme Court. Earlier this month, New Jersey Attorney General Jennifer Davenport petitioned the highest court to examine the controversy due to conflicting judicial positions adopted over the past year.
‘Interim final rule stage’
According to the OIRA website, the regulation concerning casino gambling offerings currently sits at the “interim final rule” phase.
Gaming and sports betting attorney Daniel Wallach noted that this directive, once formally issued, will take effect immediately and therefore bypass the standard public notice and comment period. Wallach explained that this approach could expose the rule to subsequent legal challenges under the Administrative Procedure Act, which regulates how federal authorities draft guidelines.
“If the interim rule goes beyond the title’s suggestion (e.g., excluding casino-style products) and provides tacit authorization for sports-event contracts, it could prompt immediate APA litigation in federal court,” Wallach stated in a post on X on Wednesday.
Last week, the CFTC also submitted crypto rulemaking documents to the White House. This development occurs as regulatory bodies accelerate their efforts following the defeat of the Clarity Act — a comprehensive legislative proposal intended to establish federal oversight across the digital asset sector for the first time — which failed a procedural vote in the Senate earlier this month.
Originally published at https://www.theblock.co/news/regulation/2026-09-30-white-house-weighs-new-cftc-event-contract-rules-in-growing-prediction-market-power-struggle-417345.
