CFTC submits event-contract rules that could challenge states' gambling claims

The Commodity Futures Trading Commission (CFTC) has submitted two proposed rules for review by the White House Office of Management and Budget. One would bring event contracts under the regulatory definition of swaps. The other would assert that event contracts are not connected to gambling. The proposals come as the CFTC seeks to regulate prediction markets and contests states' claims that they can oversee certain contracts as gambling. Event contracts traded on prediction markets such as Kalshi generally involve yes-or-no bets on measurable outcomes, including sports events and elections. The most recent federal court decision ruled that Kalshi's sports-related contracts are not swaps and are subject to state gambling regulations. However, an earlier federal ruling reached a different conclusion. The proposed rules could therefore conflict with states' claims and recent federal court rulings.