The U.S.’s prediction market regulator is proposing new rules to the White House that could attempt to redefine “swaps” this week.
- The CFTC’s interim final rule wants to exclude casino-style gambling products.
- The interim final rule would take effect after being published on the Federal Registry.
- Specifics of the rules have not been made public.
The Commodity Futures Trading Commission (CFTC) recently filed two rules with the White House Office of Management and Budget (OMB), according to multiple reports, with language affecting sports event contracts offered by trading exchanges like Kalshi and Polymarket.
One interim final rule wants to expand swaps to exclude casino-style gambling products, which is listed on the website for the Office of Information and Regulatory Affairs, a division within the White House’s OMB. The second rule is labeled “Further Definition of ‘Swap’ to Include Event Contracts.”
Multiple prediction markets operating in the U.S. offer moneyline, spreads, totals, and prop contracts on leagues like the NFL, NBA, MLB, and NCAA.
Taking effect
Because of the “interim final rule” designation, it would take effect when published on the Federal Registry and would not have to wait for public comment. However, gaming attorney Daniel Wallach noted on social media site X that depending on the language, legal action could occur with a definition change.
“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 wrote.
🚨JUST IN: The CFTC has submitted an interim final rule titled “Further Definition of ‘Swap’ to Exclude Casino-Style Gambling Products” and a proposed rule titled “Further Definition of ‘Swap’ to Include Event Contracts” to the White House’s Office of Information and Regulatory… pic.twitter.com/JJphCXWSd1
— Daniel Wallach (@WALLACHLEGAL) September 30, 2026
While specifics of the rules have not been made public yet, the CFTC could be attempting to bring clarity to sports event contracts that have been challenged in federal court regulated sports betting jurisdictions. States argue that swaps are “bets,” creating illegal gambling nationwide.
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Ongoing battle
Kalshi has argued in multiple lawsuits that sports event contracts are federally regulated and fall under the definition of derivative markets.
However, the prediction market operator has lost several court decisions, including in Nevada, on that matter already.
“The substance of the sports event contracts offered on Kalshi’s DCM is sports gambling, regardless of whether Kalshi calls them swaps,” Judge Ryan Nelson wrote after a three-judge Ninth Circuit of Appeals panel ruled in favor of Nevada in August.
As these cases work through the litigation, it’s become increasingly likely that the Supreme Court will take up the prediction market vs. states showdown over the next year or so.
In other prediction market news, the CFTC stepped in earlier this year by suing multiple states, including Illinois and New York, in support of federally regulated trading exchanges.
