U.S. CFTC moves to fold event contracts into swaps regulations as legal fight rages

The “interim final” status of the one rule means it becomes immediate policy but will be open for public input as it’s implemented. The other rule proposal explicitly folds “event contracts, including those based on sports, politics, cultural, and weather-related events” that are routinely traded on such firms as Kalshi and Polymarket into the existing U.S. regulation of swaps, but that rule effort is in the proposal stage, with a relatively brief 30-day comment period.

So far, many states and former federal government officials who had a hand in putting these laws in place have objected to the CFTC’s interpretation, and they’ve already submitted their views this week to the U.S. Supreme Court, which has been asked to resolve the issue.

But if the CFTC is called to make its case there, the agency will now be able to show it has already begun implementing Chairman Mike Selig’s regulatory view on prediction markets.

Several states are embroiled in lawsuits with the regulator as they insist they have authority over the kind of sports betting happening on the platforms, which many of the states have accused of running illegal gambling operations. In recent months, court decisions have gone both ways, including one federal appellate decision that opposed the states and two federal appellate rulings that supported them.