The Commodity Futures Trading Commission (CFTC) submitted two rule proposals to the White House on September 29. These rules aim to classify event contracts as swaps under the Commodity Exchange Act, bringing them under federal oversight.
The initiative seeks to distinguish legitimate prediction markets from gambling products. By defining these contracts as swaps, the agency intends to enforce reporting requirements, exchange registration standards, and market surveillance obligations.
This move challenges legal arguments from states such as Arizona, Nevada, and Massachusetts. These states contend that event contracts constitute gambling and should be governed by state laws rather than federal derivatives regulation.
The CFTC has previously taken steps in this sector, including a notice of proposed rulemaking for Regulation 40.11 on June 10 and no-action relief for swap data reporting on May 13. The current review process is expected to continue into 2027.
