The US Commodity Futures Trading Commission (CFTC) has proposed classifying event contracts as swaps, bringing them under federal oversight. This move aims to distinguish these financial instruments from casino-style gambling, which the regulator explicitly excludes from the swap definition.
Chairman Michael Selig stated that event contracts serve as commodity derivatives used for risk hedging and speculation. By formalizing this status, the CFTC intends to assert its exclusive jurisdiction over platforms like Kalshi and Polymarket, potentially overriding state-level gambling regulations.
The platform Kalshi is currently investigating suspicious trading activity regarding the appointment of a White House press secretary. Data indicates that bets totaling $173 were placed on Katie Zaharia shortly before the official announcement, with potential payouts reaching approximately $9,600.
Regulators and platforms are intensifying efforts to combat insider trading. In August, a former White House teleprompter operator agreed to return $107,539 in profits and pay a $65,000 fine to settle CFTC claims. Kalshi also permanently banned former congressman George Santos and fined him over $71,000.
To mitigate risks, Kalshi now requires traders to disclose their employment status for high-risk markets. In the first quarter, the company initiated over 150 internal investigations and submitted more than 20 reports to law enforcement agencies.
