Lone CFTC Chair Tries to Overrule States by Calling Prediction Market Bets Swaps Not Gambling

The fight over whether a bet on the Super Bowl is a financial product or a gamble just moved to the rulebook. The Commodity Futures Trading Commission has sent the White House two rules that would redefine event contracts as swaps, a move designed to put prediction markets like Kalshi and Polymarket firmly under federal control and out of reach of state gambling regulators.

The rules were disclosed on September 30, with Office of Management and Budget receipts dated around September 28. They come from an agency that currently has exactly one commissioner: Chairman Mike Selig.

Two rules, one goal

The first is a proposed rule that would extend the regulatory definition of swaps to cover event contracts traded on platforms such as Kalshi, Polymarket, Crypto.com and Robinhood. If a contract counts as a swap, it falls under the Commodity Exchange Act and the CFTC's exclusive jurisdiction.

The second is an interim final rule that would remove "casino-style gambling products" from what can count as a swap. That sounds like a concession, but it works as a fence: by carving out roulette-style products, the agency can argue that what remains, including sports and election contracts, is legitimate derivatives trading rather than gambling.

Together, the two rules are meant to cement the CFTC's grip on prediction markets and weaken the state lawsuits and cease-and-desist orders that treat sports event contracts as illegal betting.

Neither rule is law yet. Both still have to clear White House review, and the proposed rule will need a public comment period.

The courts are already split

The timing is not an accident. Federal appeals courts have been landing on opposite sides of this exact question. The Sixth Circuit and the Eighth Circuit recently held that Kalshi's sports-tied contracts are not swaps and remain subject to state gambling rules, a blow Finpresso covered when the Sixth Circuit sided with the states. The Third Circuit went the other way and backed the CFTC.

That kind of appellate split is the classic route to the Supreme Court, and New Jersey has already been pushing the dispute toward the justices. The high court has not ruled. A formal CFTC definition could give the platforms a stronger argument in court by pointing to the agency's own reading of its statute, though states will contest how much deference that deserves.

A one-person commission

The bigger political story is who is doing this. The CFTC is designed as a five-member bipartisan commission, but President Trump has so far declined to nominate anyone else, leaving Selig as the lone sitting member and free to set policy unilaterally.

The agency also marked both rules as not "economically significant," a label that typically means lighter White House scrutiny. That is a bold call for rules that could override gambling laws across much of the country.

Who wins and who loses

For Kalshi, Polymarket and the brokerages that have rushed into event contracts, a federal swap definition would be close to a dream outcome: one regulator, one set of rules, and a shield against state attorneys general. For states, it threatens tax revenue from licensed sportsbooks and their power to decide what kind of betting happens within their borders.

A rule written by a single commissioner, rated as economically minor, is unlikely to settle that argument. It is more likely to give both sides new material for the court fight that is already headed upward.