The Commodity Futures Trading Commission moved on Friday to cement its claim over prediction markets, publishing a notice of proposed rulemaking that would expressly define event contracts as swaps while issuing an interim final rule that draws casino-style gambling outside that definition, the agency announced Oct 9.
The proposal, Release Number 9310-26, would fold event contracts based on sports, politics, cultural and weather-related events into the swap definition under the Commodity Exchange Act, and says such contracts are already commonly known to the trade as swaps. The interim final rule, Release Number 9309-26, codifies the CFTC's position that casino-style gambling products are not derivatives; it becomes immediate policy upon publication in the Federal Register while the proposed rule enters a 30-day comment period after its own publication, according to CoinDesk and Finance Magnates.
"Americans use event contracts to hedge risks, speculate, and provide the public with information about the outcome of future events," Chairman Michael S. Selig said in the release. "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."
The boundary turns on market structure. According to Finance Magnates' reading of the rules, a wager offered under state or Tribal gambling law, where the customer bets against the operator, stays outside the swap definition; an event contract bought and sold between market participants at a market-determined price does not get that exclusion and may qualify as a swap. Selig put the same point in plainer terms on X on Oct 9: "Casino-style gambling products are not derivatives."
The rulemaking lands in the middle of a running court fight. CoinDesk reported that states and former federal officials submitted their views to the U.S. Supreme Court this week, which has been asked to resolve the dispute, and that federal appellate rulings have split, with one decision against the states and two in their favor. The Sixth Circuit ruled on Sept 25 that the Commodity Exchange Act neither applies to sports event contracts nor preempts Ohio's sports gaming law, the iGaming Times reported, and Ohio's casino regulator then sent Oct 2 cease-and-desist letters to ten platforms including Coinbase, Gemini Titan, Novig, Polymarket, ProphetX and Robinhood, with a written compliance deadline of Oct 16.
Policy watchers read the pair as litigation positioning. "We view this interim final rule as designed to improve the agency's position in court as the states are arguing that the CFTC's definition of a swap would make federally illegal any wager made at a state or tribal casino or sportsbook," TD Cowen policy analyst Jaret Seiberg wrote in a Friday note to clients, adding: "Whether this actually works is a different question." CoinDesk noted the actions had cleared White House review less than two weeks earlier, an unusually fast timeline for federal rulemaking.
Analysis: the paired structure is a pincer aimed at the courtroom, not the trading floor. The interim rule answers the states' sharpest argument, that a broad swap reading would make every casino wager federally illegal, while the proposal gives the CFTC a concrete rule to point to if the Supreme Court takes up the Kalshi case. Nothing changes for traders on Monday: one rule is interim and still open to comment, the other is only a proposal. What matters now is the 30-day comment clock once the proposal hits the Federal Register, how Ohio's Oct 16 compliance deadline interacts with the new carve-out, and whether the Supreme Court decides the federal-state question before the comment period closes.