CFTC proposals aimed at separating prediction markets from casino gambling
The CFTC issued two proposals to classify event contracts as swaps while excluding casino gambling, setting up a potential Supreme Court battle over jurisdiction.Summary
The Commodity Futures Trading Commission (CFTC) has issued two proposals addressing the regulatory treatment of event contracts. The first proposal would define event contracts—including those tied to sports, politics, cultural events, and weather—as "swaps" under federal law, asserting that these financial instruments fall squarely within the CFTC's exclusive jurisdiction under the Commodity Exchange Act. The second proposal, an interim final rule, codifies the CFTC's position that casino-style gambling products, such as sportsbook wagers and casino games, are not derivatives and are therefore excluded from the "swap" definition. CFTC Chairman Michael Selig stated that these measures provide clarity on the limits of the agency's regulatory remit. Both measures were filed on Friday and have 30-day comment windows. The proposals come amid legal battles: several states have sued prediction-market operators like Kalshi and Polymarket for alleged illegal gambling, while the CFTC has countersued to defend its federal jurisdiction. Recent court decisions have been mixed, with the Sixth Circuit siding with Ohio and Tennessee, and the Third Circuit allowing Kalshi to operate in New Jersey. The issue is likely headed to the Supreme Court, with state lawmakers filing an amicus brief urging the Court to resolve whether state or federal authorities have jurisdiction over prediction markets.
(Source：Cointelegraph)