The two measures attempt to set the stage for a potential US Supreme Court battle over federal and state jurisdiction.
The Commodity Futures Trading Commission (CFTC) has issued two proposals, one that would define event contracts as “swaps” under federal law and another that excludes traditional casino gambling from that definition.
Several states have sued prediction-market operators, including Kalshi and Polymarket, alleging illegal gambling, and the CFTC has countersued to defend its federal jurisdiction over event contracts, which it claims are beyond the purview of state regulators.
The first proposal clarifies the definition of “swap” to include event contracts, including those tied to sports, politics, cultural events and weather.
It notes these contracts are financial instruments that are commonly known to the trade as swaps and proposes to resolve any ambiguity regarding them.
“These products are commodity derivatives squarely within the CFTC’s regulatory remit under the Commodity Exchange Act and are within the agency’s exclusive jurisdiction,” Chairman Michael Selig said.
The second proposal codifies the CFTC’s view that casino-style gambling products, including wagers placed on sportsbooks and casino games, are excluded from the “swap” definition.
“Casino-style gambling products are not derivatives,” Selig said, “Just as the CFTC has done with respect to other products historically regulated by the states, the Commission today provides clarity regarding the limits of its regulatory remit by codifying the exclusion of casino-style gambling products from the ‘swap’ definition.”
The two measures help set the stage for a potential Supreme Court battle over federal and state jurisdiction.
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