CFTC seeks to define event contracts as swaps amid prediction market fight

The US Commodity Futures Trading Commission is seeking to clarify the definition of a “swap” amid a jurisdictional fight with state gambling regulators over prediction markets.

An Office of Information and Regulatory Affairs docket shows the agency has submitted a proposed rule to expand the definition of “swap” to include event contracts, along with an interim final rule that would exclude casino-style gambling products. Both are under review.

The classification matters because the CFTC has argued that federal law gives it exclusive authority over swaps traded on its regulated exchanges, such as those offered by Polymarket and Kalshi. US state regulators have disputed that position, particularly for sports event contracts, arguing they are subject to state gambling laws.