CFTC Clarifies Jurisdiction Over Prediction Markets and Gambling
- The Commodity Futures Trading Commission (CFTC) issued two measures to define event contracts as swaps under federal law.
- Chairman Michael Selig stated that event contracts are “commodity derivatives” within the CFTC’s exclusive jurisdiction.
- Casino-style gambling products, including sportsbook wagers and casino games, are excluded from the swap definition.
- The rules formalize proposals sent to the White House last month amid ongoing state lawsuits and a Supreme Court case.
- These measures carry a public comment window of 30 days.
The CFTC’s new rules aim to clarify its regulatory authority over prediction markets by categorizing event contracts as swaps, while excluding traditional gambling activities from this classification. This distinction is crucial in ongoing legal battles where states have sued prediction-market operators for alleged illegal gambling activities.
By asserting its jurisdiction over event contracts, the CFTC seeks to place platforms like Kalshi and Polymarket beyond the reach of state gambling regulators, reinforcing its regulatory remit over these financial instruments. (Source)
