CFTC swaps rules built for Supreme Court scrutiny

CFTC seeks clearer authority over event contracts

The Commodity Futures Trading Commission (CFTC) is proposing to bring contracts tied to sports, political, cultural and weather-related events explicitly within its definition of financial swaps, according to PYMNTS. The rulemaking plan, published Friday (Oct. 9), comes amid a legal battle over prediction markets that could reach the Supreme Court. The proposals carry 30-day comment windows.

Chairman Michael S. Selig argues that event contracts are commodity derivatives governed by the Commodity Exchange Act and fall exclusively under the CFTC’s authority. He has pointed to their use for hedging, speculation and generating information about future outcomes.

Federal classification, state resistance

That position would place platforms such as Polymarket and Kalshi under federal derivatives oversight. State agencies dispute the commission’s claim to sole authority, arguing that prediction platforms operate illegal gambling businesses. Federal courts have ruled in favor of both sides, according to PYMNTS, leaving the jurisdictional dispute unresolved.

The commission has also proposed excluding casino-style gambling products from the swaps definition, a measure PYMNTS reported on last month. Drawing that distinction could strengthen operators’ argument for treatment under federal derivatives law. But PYMNTS also noted that federal courts have found the CFTC’s exclusive-jurisdiction provision does not, by itself, override state gambling laws—even if the contracts qualify as swaps.

NFL presses for local oversight

The National Football League (NFL) told the Supreme Court last week that local gambling regulators should oversee prediction markets. In an amicus brief, the league argued that the CFTC had not addressed its concerns about game integrity and consumer protection, according to PYMNTS.

Kalshi spokesperson Elisabeth Diana told CoinBase last week that the company had repeatedly sought cooperation with the NFL on market integrity without receiving a response. She also pointed to Kalshi’s partnerships with other professional sports leagues, including Major League Baseball and the National Hockey League.

What it means for prediction markets

• The classification remains proposed. The 30-day comment windows are a procedural step, not a final resolution of how event contracts will be regulated.
• Swaps status may not settle jurisdiction. The court findings described by PYMNTS show that classification under federal derivatives law and exposure to state gambling laws remain separate questions.
• Sports contracts face a distinct oversight challenge. The NFL’s Supreme Court filing puts game integrity and consumer protection alongside the broader federal-versus-state dispute.
• Court outcomes remain consequential. Conflicting federal rulings leave uncertainty over whether the CFTC’s approach will withstand judicial scrutiny.