CFTC Moves to Regulate Prediction Markets as Swaps, Excludes Gambling

The U.S. Commodity Futures Trading Commission is stepping into a major regulatory debate. It wants to treat prediction market contracts as financial swaps under federal law. This would give the agency clear control over platforms like Kalshi and Polymarket. These platforms let users bet on events like elections, sports, and weather.

At the same time, the CFTC is making sure casino-style gambling stays out of its rulebook. Things like sportsbook bets and casino games won't count as swaps. The agency says these are not financial instruments. They are just plain gambling.

CFTC Chairman Michael Selig says the new rules clear up confusion. He claims event contracts are commodity derivatives. That puts them under the CFTC's power. He also says gambling products are not derivatives. So they stay outside the agency's reach.

Both rules open a 30-day window for public feedback. One is a proposed rule. The other is an interim final rule. It takes effect right away.

This move is part of a bigger legal fight. Several states have sued prediction market platforms. They say these sites run illegal gambling. The CFTC has fired back. It says it alone can regulate these markets.

The agency has been pushing its authority lately. It has taken a pro-industry stance on crypto and traditional markets. Recently, it let crypto apps offer regulated derivatives. It also moved forward on new crypto market rules.

These filings follow proposals the CFTC sent to the White House last month. The goal is to assert control without waiting for Congress to act.