The CFTC, led by chairman Michael Selig, proposed explicitly classifying event contracts as swaps so those contracts fall under federal swap rules. The agency also said it excluded casino-style gambling products and sportsbook wagers from that swaps definition in a separate provision.
The proposal arrives as a legal conflict over the rapidly growing prediction markets sector has intensified, and the CFTC has strongly asserted that it is the exclusive regulator for the prediction markets industry. Several states and tribal governments have argued that prediction markets operate as unlawful gambling and evade state gaming and tax regulations, and federal appellate courts are divided on the issue, creating a split that is now likely to reach the Supreme Court.
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U.S.-regulated prediction market platforms permit users to bet on a wide range of topics, from sports to international political events, and the article states these regulated markets do not generally provide casino-type games that are based solely on chance. Platforms named include Kalshi and Polymarket, and Kalshi did not immediately reply to a request for comment.
Better Markets, a Washington-based think tank, criticized the CFTC and said the agency was acting like a "cheerleader" for prediction markets. Benjamin Schiffrin, director of securities policy at Better Markets, said, "Calling it an event contract does not magically transform it into a financial derivative," and added, "Contrary to what Kalshi and the CFTC say, nobody 'trades' on sports. They bet on sports, and that is what event contracts on sporting events enable people to do." The agency said it acted "in the context of the ongoing debate."
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