The U.S. Commodity Futures Trading Commission (CFTC) has issued one rule and proposed another in a formal bid to cement Chairman Mike Selig's position that prediction market transactions — contracts that let traders take positions on the outcome of real-world events — should be regulated by his agency alone.

The moves — a new definition put in place on Friday and a set of proposed changes — collectively seek to secure the legal footing of event contracts as "swaps": transactions that fall under the CFTC's federal authority and outside the reach of state gambling regulators. By more explicitly defining event contracts as swaps, the agency may bolster its legal position in a dispute with several states that has already produced federal rulings against the CFTC.

Casino-style gambling carved out

Under the interim final rule issued by the agency, casino-style gambling will sit outside the definition of a swap — a contractual exchange between parties that falls under the CFTC's federal jurisdiction, a category defined in the Commodity Exchange Act. The regulator is drawing a line around the kind of sports wagering that does not qualify as a swap, while maintaining that event contracts still fit the statutory definition and therefore belong under CFTC oversight.

A related proposal would explicitly fold "event contracts, including those based on sports, politics, cultural, and weather-related events" — products routinely traded on platforms such as Kalshi and Polymarket — into the existing U.S. regulation of swaps.

The "interim final" status means the first rule becomes immediate policy but remains open for public input as it is implemented. The second measure is still at the proposal stage, with a relatively brief 30-day comment period. The agency detailed both actions in press releases 9309-26 and 9310-26.

A dispute headed to the Supreme Court

Many states, along with former federal officials who had a hand in putting the relevant laws in place, have objected to the CFTC's interpretation. They submitted their views this week to the U.S. Supreme Court, which has been asked to resolve the issue. If the CFTC is called to make its case there, the agency will now be able to show it has already begun implementing Selig's regulatory view on prediction markets.

Several states are embroiled in lawsuits with the regulator, insisting they hold authority over the kind of sports betting taking place on the platforms, which many states have accused of running illegal gambling operations. Court decisions in recent months have gone both ways: one federal appellate ruling opposed the states, while two federal appellate rulings supported them. How the Court responds to the request for review, and what commenters file during the proposal's 30-day window, are the dispute's next visible procedural markers.

"We view this interim final rule as designed to improve the agency's position in court as the states are arguing that the CFTC's definition of a swap would make federally illegal any wager made at a state or tribal casino or sportsbook," wrote Jaret Seiberg, a policy analyst at TD Cowen, in a Friday note to clients. "Whether this actually works is a different question."

Rapid timetable, shrunken commission

The actions had been submitted for White House review less than two weeks ago, reflecting an especially speedy process. The agency had ample reason to try to answer legal critics of its position that prediction markets belong in its sole domain, and clarifying that casino-style gambling is not the CFTC's business is part of that effort.

For their part, companies such as Kalshi are aligned with the regulator, seeking to establish the CFTC as their only watchdog — and, with it, a single federal framework in place of the state gambling regimes several states insist should govern the wagering.

Selig, the lone commissioner on what is meant to be a five-member commission, is currently able to make decisions about the CFTC's policies on his own. President Donald Trump has so far declined to name additional people to the agency. A similar situation has been developing at the Securities and Exchange Commission, where that five-member panel is also down to two members. The Trump administration has made a concerted effort to remove or limit the number of Democrats at regulatory agencies.

The moves build on the CFTC's late-September effort to seek event contract definitions that may defy states' gambling claims. The regulatory actions were first reported by CoinDesk.