The US Commodity Futures Trading Commission has submitted a proposed rule that would expand the statutory definition of a "swap" to include event contracts, according to a docket filing at the Office of Information and Regulatory Affairs. The submission, currently under review, also includes an interim final rule that would exclude casino-style gambling products from the swap definition.

The regulatory move lands in the middle of an escalating jurisdictional fight between the federal derivatives regulator and state gambling authorities over prediction markets.

Why the classification matters

The CFTC has argued that federal law grants it exclusive jurisdiction over swaps traded on its regulated exchanges — a category that includes the event contracts offered on platforms such as Polymarket and Kalshi. Formal classification of event contracts as swaps would strengthen that claim by anchoring it in the commission's own definitional framework rather than relying solely on statutory interpretation.

State regulators have disputed the CFTC's position. Their argument centers on sports event contracts in particular, which they contend fall under state gambling laws rather than federal commodities statutes. Several states have moved against prediction market operators offering sports-related contracts, treating them as unlicensed gambling products within their borders.

The interim final rule component of the CFTC's submission draws a boundary within the agency's own framework: casino-style gambling products would sit outside the swap definition, while event contracts listed on designated contract markets would sit inside it. That distinction gives the commission a doctrinal answer to the charge that its jurisdictional claim sweeps ordinary gambling into federal derivatives law.

Legal backdrop

The rulemaking arrives as the courts weigh related questions. Kalshi recently lost an appeal in litigation over sports event contracts, a ruling that sets up a potential Supreme Court case on whether state gambling regimes or the CFTC's exclusive swap jurisdiction controls.

A Supreme Court review could resolve the federal-state conflict definitively. In the meantime, the CFTC's definitional rulemaking gives the agency a regulatory record it can cite in ongoing enforcement and litigation — and gives operators a clearer sense of which products sit squarely within the federal perimeter.

Operational consequences

For platforms like Polymarket and Kalshi, the stakes are operational as much as legal. If event contracts are locked into the swap definition, state-level gambling enforcement actions against federally registered venues become harder to sustain, and the compliance burden consolidates under CFTC oversight: registration, product listing standards and market surveillance.

For state regulators, the proposed exclusion of casino-style gambling products from the swap definition preserves room to police offerings that operate outside designated contract markets. The carve-out signals the CFTC is not claiming authority over all gambling-adjacent activity, only over contracts traded on exchanges it regulates.

Both documents remain under review at the Office of Information and Regulatory Affairs, part of the standard interagency clearance process before a proposed rule is published in the Federal Register and opened to public comment. An interim final rule would typically take effect upon publication while comments are still accepted, though the precise effective dates depend on how the agency structures the final text.

The timing of the CFTC's push matters. A published rule with a developed administrative record could influence how courts — potentially including the Supreme Court, if the Kalshi litigation reaches that stage — assess the scope of the commission's authority over event contracts. A definitive judicial ruling, in turn, would determine whether prediction market operators face a single federal regime or a patchwork of state gambling laws for the foreseeable future.