CFTC submits rule to define event contracts as swaps amid state gambling fight
In brief
- CFTC submitted a proposed rule expanding the "swap" definition to cover event contracts, per an OIRA docket.
- A separate interim final rule would exclude casino-style gambling products; both rules are under review.
- CFTC argues it has exclusive authority over swaps on its regulated exchanges, including Polymarket and Kalshi.
- State regulators argue sports event contracts are subject to state gambling laws.
Two rules, both under review
The swap proposal wasn't the only filing. The OIRA docket also shows an interim final rule that would exclude casino-style gambling products, and both rules are under OIRA review.
One rule would bring event contracts into the swap definition. The other would carve casino-style products out. For now, both are just submissions sitting with OIRA (that's where the process stands).
Why the swap label matters
The CFTC has argued that federal law gives it exclusive authority over swaps traded on its regulated exchanges, and it points to the contracts offered by Polymarket and Kalshi as examples. Cointelegraph sees a direct link between that argument and the new filing:
The classification could assist the CFTC’s claim that it has exclusive federal jurisdiction over event contracts offered
That's Cointelegraph's analysis. It isn't a ruling.
State regulators see it differently. They've disputed the CFTC's position, particularly for sports event contracts, and they argue those products are subject to state gambling laws. Neither the CFTC's argument nor the states' gambling-law position has been settled by the filings described in the docket.
A related court loss
Cointelegraph's report also pointed readers to a related story: Kalshi lost an appeal, a result that sets up a potential Supreme Court case. Cointelegraph linked that report alongside its coverage of the docket.
For prediction markets like Polymarket and Kalshi, it's the swap definition that ties into the jurisdiction question. Cointelegraph's read is that classifying event contracts as swaps could help the CFTC's exclusive-jurisdiction claim, while the casino-style exclusion sits in a separate interim final rule.
Neither rule has cleared OIRA review yet.
Frequently asked questions
What has the CFTC submitted on event contracts?
According to an Office of Information and Regulatory Affairs docket, the CFTC submitted a proposed rule to expand the definition of "swap" to include event contracts. It also submitted an interim final rule that would exclude casino-style gambling products. Both rules are under review.
Why does classifying event contracts as swaps matter?
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. Cointelegraph reported that the classification could support the CFTC's claim of exclusive federal jurisdiction over event contracts on regulated prediction markets.
Why do state regulators disagree with the CFTC?
US state regulators have disputed the CFTC's position, particularly for sports event contracts. They argue those contracts are subject to state gambling laws, which puts them at odds with the agency's claim of exclusive federal authority.
