White House weighs CFTC event contract rules as prediction market oversight battle intensifies

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CFTC event contract rules review

Highlights

The CFTC filed proposals with the White House's OIRA to broaden the swap definition to cover event contracts and exclude casino-style gambling products.
The casino gambling rule has reached the interim final rule stage, enabling immediate implementation without the usual comment period and elevating legal risk for prediction markets.
A federal appeals court allowed Ohio and Tennessee to enforce sports gambling laws against Kalshi, highlighting division over federal versus state oversight with potential Supreme Court involvement.

CFTC rule push reaches White House review

The Block reported that the Commodity Futures Trading Commission has filed two proposals with the White House's Office of Information and Regulatory Affairs, seeking to further the definition of a swap to include event contracts and to exclude casino-style gambling products.

OIRA, part of the Office of Management and Budget, reviews federal regulations before publication. The filing shows the agency is pressing ahead with a broader effort to assert jurisdiction over prediction markets, even as states challenge that authority.

Platforms such as Polymarket and Kalshi have grown into businesses valued in the tens of billions of dollars and offer contracts tied to outcomes ranging from corporate events to entertainment and sports. The CFTC argues that most contracts on these platforms, including sports-related products, are swaps and therefore fall within federal oversight.

The casino gambling rule is now at an interim final rule stage, according to the OIRA website. Gaming and sports betting lawyer Daniel Wallach said that status means the measure could take effect immediately without the usual notice-and-comment process, potentially increasing the risk of legal challenges under the Administrative Procedure Act.

State lawsuits and court splits raise stakes

States argue that some prediction market platforms are operating illegally in their jurisdictions, violating gambling laws, applying insufficient age limits and avoiding tax obligations. Several states have sued certain platforms, while the CFTC has responded with counteractions aimed at blocking state oversight.

Last week, Kalshi lost an appeal after a federal appeals court ruled that Ohio and Tennessee can enforce their sports gambling laws against the platform. The court rejected Kalshi's position that federal law shields its sports contracts and places them under CFTC regulation.

The dispute may yet reach the Supreme Court. Earlier this month, New Jersey Attorney General Jennifer Davenport asked the high court to review the matter after courts took differing positions over the past year.

Wallach said on X that if the interim rule extends beyond excluding casino-style products and effectively authorizes sports-event contracts, it could trigger immediate federal litigation. The new filings also come shortly after the CFTC submitted crypto rulemaking to the White House, as federal regulators continue advancing sector oversight after the Clarity Act failed in the Senate in a procedural vote earlier this month.

Our earlier report on scrutiny of Kalshi and Polymarket trading volumes detailed how unusual activity in specific contracts fueled concerns that some reported volume may be inorganic or even resemble wash trading. We also noted that the debate is intensifying as both platforms pursue lofty valuations and potential public listings, while the CFTC examines activity tied to Kalshi’s products amid broader oversight pressure on prediction markets.

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