On Oct. 9, the Commodity Futures Trading Commission unveiled two measures aimed at drawing a clear federal regulatory line between prediction-market contracts and conventional gambling. The agency proposed explicitly adding sports and other event contracts to the definition of a swap—a specific type of financial derivative—while simultaneously issuing an interim final rule that formally excludes sportsbook and casino bets.
The event-contract proposal applies to sports, political races, cultural happenings, and weather results. According to CFTC Chairman Michael S. Selig, these offerings fall squarely under the agency’s exclusive authority governed by the Commodity Exchange Act.
Such classification holds significance because these products bear a strong resemblance to standard bets. The CFTC points out that event contracts frequently enable participants to purchase yes-or-no positions on upcoming results with a standard fixed payout of $1. Their worth hinges entirely on the final outcome, making them tools for either risk hedging or speculation.
This difference is evident in the layout of various platforms: a review of the Cloudbet sportsbook by CryptoSlate focuses on odds-based betting, whereas its evaluation of Polymarket centers on tradable outcome contracts.
This proposed addition is not yet final, as the CFTC is accepting written public comments via Regulations.gov for 30 days following its official publication in the Federal Register.
Meanwhile, the action regarding casino wagers takes the form of an interim final rule. The commission explains that this move formalizes its existing stance that casino-style betting options—including bets placed on sportsbooks and casino games—are excluded from the swap category.
The CFTC notes that this exclusion becomes active immediately upon its appearance in the Federal Register and similarly includes a 30-day window for public comments starting from that date. Because neither announcement provides the exact Federal Register publication date, the Oct. 9 release does not determine when the effective date or comment deadline begins.
State-law disputes remain consequential
The agency’s regulatory stance encounters an ongoing legal hurdle: whether federal oversight overrides state-level gambling regulations.
During a Sept. 25 decision concerning preliminary-injunction appeals associated with prediction-market firm Kalshi, the Sixth Circuit ruled that the business failed to demonstrate that its sports-event contracts satisfied the statutory definition of a swap. Furthermore, the court determined that even if those contracts were classified as swaps, the Commodity Exchange Act did not explicitly or implicitly preempt the gambling laws of Ohio or Tennessee.
This secondary ruling highlights the challenges facing companies striving for nationwide availability: succeeding on a product classification debate does not automatically resolve conflicts concerning state jurisdiction.
This separation also faced pushback from the advocacy organization Better Markets. In an Oct. 9 release, Benjamin Schiffrin, the group’s director of securities policy, contended that sports event contracts function as a form of sports wagering and ought to stay governed by state gambling regulations.