CFTC moves to categorize event contracts as swaps in prediction market jurisdiction battle

CFTC moves to categorize event contracts as swaps in prediction market jurisdiction battle

This categorization would support the CFTC's assertion of having exclusive federal oversight authority over event contracts available through regulated prediction market platforms.

The United States Commodity Futures Trading Commission is working to provide clarity on what constitutes a "swap" as it engages in a jurisdictional dispute with state gambling authorities concerning prediction markets.

According to an Office of Information and Regulatory Affairs docket, the regulatory body has put forward a proposed rule aimed at broadening the definition of "swap" to encompass event contracts, accompanied by an interim final rule designed to carve out casino-style gambling products from this classification. Both proposals are currently undergoing review.

This categorization holds significance because the CFTC has maintained that federal legislation grants the agency exclusive jurisdiction over swaps that are traded on exchanges under its regulatory oversight, including platforms such as those operated by Polymarket and Kalshi. State-level regulators across the US have challenged this interpretation, especially concerning sports event contracts, contending that these products fall under the purview of state gambling legislation.