The Commodity Futures Trading Commission is moving to lock in its authority over prediction markets, sending the White House two rules that would redraw the legal definition of a "swap" around event contracts—the yes-or-no wagers traded on platforms such as Kalshi and Polymarket.

Prediction markets allow users to trade on the outcomes of elections, economic data releases, and other real-world events, and their rapid growth has placed the sector at the center of a widening regulatory tug-of-war.

The regulator submitted both proposals on Sept. 28 to the Office of Information and Regulatory Affairs (OIRA), the White House office that reviews federal rules before they are formally published. The first, a proposed rule identified as RIN 3038-AF82, would further define the term "swap" to explicitly include event contracts and will head to public comment. The second, an interim final rule (RIN 3038-AF81), would exclude "casino-style gambling products" from the swap definition and could take effect upon approval. The CFTC classified both as not economically significant—generally a lighter-review track at OIRA than major rulemakings—and their full text is not yet public. Once OIRA clears them, formal publication would reveal the full texts and open the proposed rule's comment period.

The "swap" label is the crux of a fierce jurisdictional fight. If event contracts are swaps, they fall under the CFTC's authority, which Chairman Michael Selig has argued is exclusive, placing the platforms beyond the reach of state gambling regulators. Multiple states have sued prediction-market operators alleging illegal gambling, and the CFTC has countersued to block that oversight. For the platforms and their users, the label effectively determines which rulebook applies: a single federal derivatives regime or a patchwork of state gambling law.

The rulemaking follows a string of conflicting appeals-court decisions over whether such contracts qualify as swaps—a split that has left the contracts' legal standing unsettled and has now drawn the attention of the Supreme Court.

The move extends a broader pattern of the CFTC pressing ahead with its own rules rather than waiting on Congress, part of a post-Clarity Act shift toward regulators setting crypto policy. The agency recently sent a separate crypto-markets rulemaking to the White House, while its staff warned that "mention" contracts tied to public statements invite manipulation.

Regulatory scrutiny continues to mount, even at the federal level. The CFTC is investigating former Rep. Adam Kinzinger over Kalshi bets tied to his own pardon. The Commission also issued an advisory earlier this week warning against "mention markets," suggesting that prediction-market contracts settling on whether a named person says certain words should be presumed readily susceptible to manipulation.

At the state level, New York last week sued Polymarket with the aim of banning it within its jurisdiction, echoing an earlier action against Kalshi.

For now, the CFTC's filings signal intent, not final rules. Both measures must still clear the White House review process. The near-term markers to watch: OIRA's decisions on both filings, the first public release of their full texts, and the proposed rule's comment window—alongside whether the Supreme Court takes up the appeals-court split. But by seeking to write the swap definition itself, the agency is attempting to settle in regulation what courts and states have been fighting over case by case.