CFTC sends White House two rules on prediction-market contracts

The Commodity Futures Trading Commission (CFTC) submitted two prediction-market rules to the White House Office of Information and Regulatory Affairs on Sept. 28. The office reviews federal rules before publication. The first proposal, RIN 3038-AF82, would explicitly include event contracts in the definition of a swap and will go to public comment. Event contracts are yes-or-no wagers traded on platforms such as Kalshi and Polymarket. The second rule, an interim final rule identified as RIN 3038-AF81, would exclude casino-style gambling products from the swap definition and could take effect upon approval. The CFTC classified both rules as not economically significant. The full text of the rules is not yet public. If event contracts qualify as swaps, they fall under CFTC authority. CFTC Chairman Michael Selig has argued that the agency's authority is exclusive, placing the platforms beyond state gambling regulators' reach. Multiple states have sued prediction-market operators, alleging illegal gambling. The CFTC has countersued to block state oversight. Conflicting appeals-court decisions on whether the contracts qualify as swaps have drawn the Supreme Court's attention. The filings continue a post-Clarity Act pattern of the CFTC pursuing its own rules rather than waiting for Congress. The CFTC recently sent a separate crypto-markets rulemaking to the White House. CFTC staff warned that contracts tied to whether someone mentions specified words invite manipulation. The CFTC also issued an advisory earlier this week suggesting that such contracts should be presumed readily susceptible to manipulation. The CFTC is investigating former Representative Adam Kinzinger over Kalshi bets tied to his own pardon. New York sued Polymarket last week with the aim of banning it in the state, following an earlier action against Kalshi. The filings signal the CFTC's regulatory intent, not final rules, amid continuing disputes with states and in the courts.