The US Commodity Futures Trading Commission has proposed two measures that could sharpen the legal boundary between prediction markets and traditional gambling, while potentially laying the groundwork for a major dispute over whether federal or state authorities control event-based contracts.
According to Cointelegraph, the proposals would classify certain event contracts as “swaps” under federal law, while explicitly excluding casino-style products from that category. The measures were filed on Friday and each carries a 30-day period for public comments.
CFTC seeks clearer definition of event contracts
The first proposal would clarify that the definition of a swap includes event contracts linked to sports, politics, cultural events and weather. The CFTC said these products are financial instruments commonly understood in the market as swaps, and that the proposal is intended to remove uncertainty about their legal classification.
CFTC Chairman Michael Selig said the contracts are commodity derivatives that fall within the agency’s regulatory authority under the Commodity Exchange Act. He also said the products are subject to the CFTC’s exclusive jurisdiction.
That position directly affects prediction-market operators such as Kalshi and Polymarket. These platforms offer contracts tied to the outcome of events, and their legal status has become the subject of disputes with several US states. State authorities have sued some operators, alleging that their activities amount to illegal gambling. The CFTC, in turn, has countersued in an effort to defend its claim that federal law governs event contracts.
At the center of the dispute is whether a contract linked to an event should be treated as a financial derivative regulated by a federal agency, or as a wager covered by state gambling rules. The first proposal supports the federal interpretation for the types of event contracts identified by the CFTC.
Casino products would remain outside the swap definition
The second proposal would codify the CFTC’s position that traditional casino-style gambling products do not qualify as swaps. It specifically covers wagers placed through sportsbooks and casino games.
Selig said casino-style products are not derivatives. He described the proposal as an effort to clarify the limits of the CFTC’s remit, consistent with the agency’s historical treatment of products regulated by the states.
The distinction is important because it does not seek to bring ordinary casino gambling under federal derivatives rules. Instead, the two measures draw a line between products the CFTC considers financial contracts and activities it views as conventional state-regulated gambling.
The proposals do not themselves resolve the lawsuits involving prediction-market companies. Their comment periods give interested parties 30 days to submit views before the agency considers the measures further. However, by formally stating its interpretation, the CFTC is positioning its argument in the broader jurisdictional conflict.
Court rulings have produced competing outcomes
The legal landscape has so far developed in different directions across US appeals courts. In late September, Cointelegraph reported that Kalshi lost an appeal after a three-judge panel of the 6th US Circuit Court of Appeals sided unanimously with Ohio and Tennessee. The court found that Kalshi had not shown that its sports-event contracts were swaps under the CFTC’s jurisdiction, leaving room for the states to regulate them under their gambling laws.
That ruling followed an April decision from the 3rd Circuit Court of Appeals that allowed Kalshi to continue operating in New Jersey while its appeal proceeds. The earlier court said Kalshi was likely to succeed with its argument that federal law preempts New Jersey’s regulations.
The conflicting decisions have helped create the possibility of a US Supreme Court case. A group of state lawmakers has filed an amicus brief urging the Supreme Court to consider the dispute between Kalshi and state gaming authorities. A ruling could determine whether prediction-market companies are primarily subject to state gambling regulators or federal oversight.
The CFTC’s new proposals add a formal regulatory interpretation to that dispute. They also underscore that the controversy is not limited to whether individual contracts resemble bets; it concerns the division of authority between federal commodities law and state gambling law.
Moneyiar market picture
Moneyiar data at 11:39 on October 11, 2026, show mixed performance among the listed digital assets:
- Celestia (TIA) was priced at $0.5854920859, up 20.01% over 24 hours and 24.72% over seven days.
- Tagger (TAG) was priced at $0.0006180082, down 4.17% over 24 hours and 23.13% over seven days.
- Basic Attention Token (BAT) was priced at $0.144354679, up 2.23% over 24 hours and 36.79% over seven days.
- RedStone (RED) was priced at $0.1479489658, down 1.12% over 24 hours and 15.22% over seven days.
These market figures are separate from the CFTC proposals and do not indicate how the jurisdictional dispute will develop.
