The U.S. Commodity Futures Trading Commission (CFTC) has submitted two rule proposals to the White House, seeking to reclassify "event contracts" – the core products of prediction‑market platforms – as swaps. By doing so, the agency aims to place federal regulators, rather than state gambling commissions, in charge of the rapidly growing market for bets on future events such as election outcomes, economic indicators, and sports results.
Regulatory backdrop
Prediction markets allow participants to buy and sell contracts that pay out based on the occurrence of a specific event. While they resemble traditional gambling, many operators argue that the contracts function more like financial derivatives because they are tied to real‑world data and can be used for hedging. The CFTC, which oversees the U.S. swaps market, contends that this financial characteristic gives it jurisdiction.
Details of the proposals
According to Decrypt, the proposals would "define event contracts as 'swaps' while excluding 'casino‑style gambling products.'" The definitions are designed to create a clear regulatory line: contracts whose payoff is linked to a measurable future outcome would fall under the CFTC, whereas games of chance without a financial‑risk component would remain under state gambling laws. CoinDesk reported that the CFTC sent the proposals to the White House for review through the Office of Information and Regulatory Affairs (OIRA), the inter‑agency body that screens major regulations.
"The two proposals would define event contracts as 'swaps' while excluding 'casino‑style gambling products' — a bid to cement the agency's exclusive jurisdiction as states sue prediction‑market operators," – Decrypt
The agency’s push follows a series of court decisions that have limited its authority. In 2022, the CFTC lost a case against Kalshi, a regulated prediction‑market exchange, which the court ruled was not a swap dealer. More recently, a federal appeals court ruled against a prediction‑market platform cited by BloodHorse, reinforcing the view that many of these sites operate under gambling statutes.
Political and legal context
State officials have increasingly framed prediction markets as gambling, launching lawsuits against operators and lobbying for stricter state‑level regulation. The Block noted that the CFTC's rulemaking is a direct response to these state‑level actions, positioning the agency as the sole national regulator. The White House is now weighing the proposals, though no timeline for a decision has been disclosed. Bloomberg highlighted that the administration’s review could set a precedent for how emerging crypto‑related products are overseen at the federal level.
Industry observers say the outcome will affect both traditional finance and the crypto ecosystem. Many decentralized prediction‑market projects, built on blockchain technology, view the CFTC’s definition as a potential pathway to regulatory clarity and legitimacy. Conversely, some market participants fear that classification as swaps could impose heavy compliance costs, similar to those faced by futures exchanges.
State attorneys general, meanwhile, argue that the CFTC’s approach undermines state sovereignty over gambling regulation. Yahoo Finance reported that several states have already filed suits challenging the CFTC’s authority, contending that the agency’s definition stretches the statutory language of the Commodity Exchange Act.
If the White House endorses the CFTC’s proposals, prediction‑market operators would likely need to register as swap dealers, adopt reporting standards, and adhere to capital‑requirement rules that currently apply to futures and options exchanges. The shift could bring more mainstream investors into the space but may also push smaller, crypto‑native platforms toward jurisdictions with looser oversight.
For now, the proposals remain under OIRA review, and the final regulatory direction will hinge on how the administration balances federal oversight with the states' long‑standing gambling authority. The decision will shape the next chapter of an industry that sits at the intersection of finance, technology, and public policy.
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Live data: CoinGecko — 2026-09-30 21:21 UTC
