CFTC proposes new swap definition to regulate prediction markets

CFTC Proposes Definition to Regulate Prediction Markets

Proposed Definition

The CFTC has proposed a new definition to regulate prediction markets, bringing event contracts tied to sports, politics, culture, and weather under federal oversight. This definition would place prediction markets more firmly under federal regulation, potentially resolving a turf war with states arguing that these markets are gambling.

Background

The CFTC has taken the opposite view of several states, maintaining that it holds exclusive federal jurisdiction over these markets. Courts have issued split decisions on the question, with some rulings siding with state authority over event contracts and others upholding federal preemption for markets registered with the CFTC.

Implications

The proposed definition is definitional, and definitions carry real weight in financial law. Whether something counts as a swap determines which regulator gets to write the rules, inspect the books, and bring enforcement actions. By tying event contracts to the swap definition, the CFTC is trying to anchor prediction markets in federal derivatives law.

Timeline

The CFTC sent the rules to the White House on September 28, 2026, and they were issued less than two weeks later. The interim rule handles the exclusion side of the ledger, stating that casino-style gambling products do not count as swaps under the Commodity Exchange Act. The proposed rule handles inclusion, bringing event contracts based on sports, politics, and weather inside the swap definition.

Comment Period

The comment period is the next step to watch. Over the 30 days following publication, platforms, state officials, consumer advocates, and exchanges will all have a chance to push back or push for changes.