The White House is weighing two Commodity Futures Trading Commission proposals that would extend the agency's authority over prediction markets, filings on the Office of Information and Regulatory Affairs' review site show.

The CFTC filed the rulemakings with OIRA, the Office of Management and Budget division that reviews federal regulations before publication, to "further" the definition of a swap to include event contracts and to "exclude casino-style gambling products." The filings advance the agency's effort to assert jurisdiction over the sector despite pushback from states.

Prediction markets such as Polymarket and Kalshi are now valued at tens of billions of dollars each. Users trade outcomes ranging from which companies will go public to who takes second place on Dancing with the Stars. Sports contracts have become the sector's sharpest legal fault line.

The CFTC has argued that most contracts on prediction markets, including those involving sports, are swaps and therefore fall under federal jurisdiction. States contest that reading. They say the platforms operate illegally in their jurisdictions, violate gambling laws, set inadequate age limits and avoid paying taxes. Multiple states have sued the platforms. The CFTC has countersued to block state oversight of the markets.

A split among the circuits

The courts are now split. Last week, a federal appeals court ruled that Ohio and Tennessee can enforce their sports gambling laws against Kalshi, rejecting its argument that federal law shields its sports contracts for CFTC regulation. The decision widened a divide among the circuits that has opened over the past year. Earlier this month, New Jersey Attorney General Jennifer Davenport asked the Supreme Court to review the issue, a petition that could determine whether state gambling statutes or federal commodities law governs sports-event contracts.

Interim final rule posture

The proposal covering casino-style products has reached the "interim final rule" stage, according to the OIRA site. That procedural choice carries weight. Gaming and sports betting lawyer Daniel Wallach said the rule, once released, would go into effect immediately and bypass the usual notice-and-comment process, leaving it open to court intervention under the Administrative Procedure Act, the statute governing how federal agencies propose rules.

"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 in a post on X on Wednesday.

For operators, the two definitions would settle the question now driving their legal exposure: which regulator controls their contracts. Extending the swap definition to event contracts would anchor the platforms in federal commodities law, the basis the CFTC has asserted in its countersuits. The carve-out for casino-style products would draw the boundary between contracts the agency regulates and products it treats as gambling. That line decides whether platforms answer to state gambling enforcement, with its age limits and taxes, or to federal oversight.

The prediction market filings are not the agency's only pending work. Last week, the CFTC filed crypto asset rulemaking with the White House as well. Regulators are pressing ahead after the Clarity Act, a sweeping bill that would have comprehensively regulated the digital asset industry at the federal level for the first time, failed in the Senate during a procedural vote earlier this month.

The near-term calendar is crowded. OIRA must clear both rules, the casino-products rule would take effect on publication, and the Supreme Court must decide whether to hear New Jersey's petition. Each outcome could redraw the regulatory perimeter for a sector valued in the tens of billions of dollars.