- The CFTC issued an interim final rule and proposed another rule tied to event contracts.
- The agency wants certain event contracts treated as swaps under federal oversight.
The U.S. Commodity Futures Trading Commission is taking formal steps to strengthen its authority over event contracts as a legal fight with several states continues. On Friday, the agency issued one rule that takes effect immediately and proposed another that would more clearly place certain event contracts within the definition of swaps. The move reflects Chairman Mike Selig’s view that prediction market transactions should fall under the CFTC alone rather than state gambling regulators. The agency is also drawing a line between casino-style gambling, which it says should stay outside the swaps definition, and event contracts traded on platforms such as Kalshi and Polymarket.
CFTC formalizes its event contracts approach
The CFTC said its latest actions are meant to secure stronger legal footing for its position on prediction markets. The agency is seeking to make explicit that event contracts can qualify as swaps, which would place them under federal derivatives oversight and outside the reach of state gambling authorities.
At the same time, the agency is trying to clarify what should not be considered a swap. According to the interim final rule, casino-style gambling will remain outside that definition. In the related proposal, however, the CFTC said event contracts, including those tied to sports, politics, culture, and weather, fit within the existing regulatory framework for swaps.
How event contracts fit into the legal dispute
The CFTC’s effort comes while several states are already in court against the regulator. Those states argue they have authority over sports betting activity taking place on these platforms, and many have accused the companies involved of running illegal gambling operations.
Court outcomes have been mixed in recent months. One federal appellate decision went against the states, while two federal appellate rulings supported them. The issue has also reached the U.S. Supreme Court, where states and former federal officials who helped shape the laws have submitted their views this week objecting to the CFTC’s interpretation.
Rule details and timing for event contracts
The interim final rule takes immediate effect, though it remains open to public input as it is implemented. The second measure is still only a proposal, but it would explicitly fold event contracts traded on firms such as Kalshi and Polymarket into U.S. swaps regulation.
That proposal has a 30-day comment period. The two actions were submitted for White House review less than two weeks ago, showing a notably fast process. The agency appears to be responding directly to criticism of its legal position by clarifying that casino-style gambling is not part of the CFTC’s role while preserving its claim over event-based markets.
Selig and industry alignment
Mike Selig is currently the only commissioner on what is supposed to be a five-member CFTC. That position has allowed him to make policy decisions on his own. President Donald Trump has not named additional members to the commission so far.
Companies such as Kalshi are aligned with the CFTC on this matter because they are also seeking to establish the agency as their sole regulator. Jaret Seiberg, a policy analyst at TD Cowen, wrote in a Friday note that the interim final rule appears designed to improve the agency’s court position, though he added that whether it will succeed is a separate question.
Conclusion
The CFTC has moved beyond argument and into formal rulemaking as it tries to establish that event contracts belong under its oversight as swaps. One rule is already in effect, and another proposal would directly cover contracts based on sports, politics, cultural, and weather events. These steps arrive while lawsuits with several states remain active and after mixed federal appellate decisions. They also give the agency a more concrete regulatory record if it must defend its position before the U.S. Supreme Court. For now, the main policy line is clear: casino-style gambling is outside the swap definition, while the CFTC says event contracts belong inside it.
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