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CFTC Proposes Rules to Regulate Event Contracts as Swaps
The U.S. Commodity Futures Trading Commission (CFTC) has submitted two proposed rules for review to the Office of Management and Budget (OMB) at the White House. One of the rules seeks to redefine event contracts as swaps, while the other is a temporary final rule that aims to exclude certain gambling products from this definition. These submissions were made on September 28, 2026, and the OMB review is the final step before the rules are opened for public comment.
This regulatory move comes amid ongoing legal disputes between the CFTC and various states regarding prediction markets. Event contracts typically involve binary bets on specific outcomes, such as the results of sports events or elections. Recent rulings from the U.S. Sixth and Eighth Circuit Courts of Appeals have determined that certain sports contracts do not qualify as swaps and should instead be regulated under state gambling laws. However, the Third Circuit Court of Appeals has ruled in favor of the CFTC's jurisdiction over prediction markets, leading to a legal inconsistency at the federal level.
CFTC Chairman Mike Selig asserts that the agency has exclusive authority over prediction markets. If event contracts are officially classified as swaps, it could undermine the legal standing of several states in ongoing lawsuits against platforms like Kalshi. Currently, the CFTC is operating with only one commissioner, as President Trump has not nominated additional members, allowing Selig to advance regulatory decisions unilaterally. Furthermore, the CFTC has also submitted a pre-rule to the OMB focusing on cryptocurrency regulation.
Source: KLEA News