CFTC proposes defining prediction market event contracts as swaps

The US Commodity Futures Trading Commission (CFTC) is seeking to clarify the definition of a swap amid a jurisdictional dispute with state gambling regulators over prediction markets. An Office of Information and Regulatory Affairs docket shows that the CFTC submitted a proposed rule to expand the definition of a swap to include event contracts. The docket also shows that the CFTC submitted an interim final rule that would exclude casino-style gambling products. Both rules are under review. The proposed classification could support the CFTC's claim of exclusive federal jurisdiction over event contracts on regulated prediction markets. The CFTC argues that federal law gives it exclusive authority over swaps traded on its regulated exchanges, including contracts offered by Polymarket and Kalshi. State regulators dispute that position, particularly for sports event contracts, which they argue are subject to state gambling laws.