CFTC Draws the Line Between Prediction Markets and Gambling in New Rules

In brief

The CFTC issued two measures Friday: a proposed rule expanding the “swap” definition to include event contracts , and an interim final rule excluding casino-style gambling like sportsbooks and casino games.

Chairman Michael Selig said event contracts are “commodity derivatives squarely within the CFTC’s regulatory remit” and under its “exclusive jurisdiction,” while “casino-style gambling products are not derivatives.”

The rules formalize proposals sent to the White House last month, as the agency asserts authority amid state lawsuits and a Supreme Court fight.

The Commodity Futures Trading Commission is pressing its claim over prediction markets, issuing a pair of measures Friday that would formally define event contracts as “swaps” under federal law while carving out traditional gambling.

The first, a proposed rule opened for public comment, would expressly expand the definition of “swap” to include event contracts, including those tied to sports, politics, cultural events and weather.

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The CFTC said the contracts are financial instruments “commonly known to the trade as swaps” and that the move resolves any ambiguity about their status. “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,” Chairman Michael Selig said in a statement.

The second, an interim final rule effective immediately upon publication, draws the opposite line, codifying the agency’s longstanding view that casino-style gambling products, including sportsbook wagers and casino games, are excluded from the swap definition.

“Casino-style gambling products are not derivatives,” Selig said, framing the step as clarifying “the limits of its regulatory remit.” Both measures carry 30-day comment windows.

Together, the two rules sharpen a distinction at the heart of a fierce jurisdictional fight: if event contracts are swaps, they fall under the CFTC’s authority, which Selig has argued is exclusive, placing platforms like Kalshi and Polymarket beyond the reach of state gambling regulators. Multiple states have sued prediction-market operators alleging illegal gambling, and the CFTC has countersued to defend its turf.

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