The Commodity Futures Trading Commission (CFTC) has passed two proposed rules on prediction-market event contracts to the White House for review, bringing federal oversight a step closer to formal rulemaking. The drafts are now with the Office of Information and Regulatory Affairs (OIRA), the office that examines federal regulations before they are published. At issue is whether event contracts should be handled as financial-market swaps or as gambling under federal law.
Why the dispute matters
That question sits at the heart of the long-running clash between platforms such as Kalshi and state gambling regulators. Kalshi maintains that its sports and election contracts are financial instruments. State regulators see them as wagers that should fall under state licensing rules.
Two proposals target the definition of a swap
The lead proposal, docketed as RIN 3038-AF82, would widen the legal definition of a swap so that it covers event contracts traded on prediction markets like Kalshi. If adopted, that could give regulators a firmer basis for treating such products as financial instruments, although the real-world effect would depend on the final wording and how the rule is applied.
A second, companion proposal asks whether certain gaming-style products can be carved out of the swap definition. If approved, it would stop Designated Contract Markets, the CFTC-registered exchanges Kalshi operates as, from listing contracts tied to online casino-style products such as blackjack and craps.
Read together, the two measures deal with both sides of the problem: whether event contracts belong inside the swap definition, and how gaming-style products should be treated. The dividing line between prediction markets and sportsbooks is central to both, particularly when a contract is tied to a sporting event, and operators on either side of that line could feel real consequences.
It is important to remember that these are drafts under review, not rules in force. The docket does not give a timetable for the next stages, and OIRA has not announced when its review will finish. The text could still change before publication, so the submission settles nothing about whether a given contract is a swap or a bet.
A court ruling sharpens the jurisdictional fight
The CFTC submission follows a Sixth Circuit decision in favour of Tennessee. The court reversed a lower-court ruling and allowed the state to regulate prediction-market sports contracts. Kalshi began offering event contracts in Tennessee in 2025, arguing that they met the standard for swaps.
The ruling does not resolve the federal-state conflict in every jurisdiction or for every kind of contract. It does show what is at stake for operators whose federal regulatory arguments are being tested against state gambling laws, and industry voices and lawmakers have continued to call for clarity.
What it could mean for operators
For gaming operators, the outcome could shape how federal derivatives oversight meets state licensing and restrictions. The line the CFTC draws between prediction markets and sportsbooks is therefore more than a drafting detail: it may decide which products registered exchanges are allowed to list and which state rules operators will have to deal with.
The Senate vote adds a separate federal track
On the same day the drafts reached the White House, the Senate passed the Protect College Sports Act by a vote of 77 to 22. Introduced by Texas Senator Ted Cruz, the bill would let college conferences and athletic associations bar athletes who take part in sports betting or sports event contracts.
The Senate vote is a parallel development rather than a ruling on the CFTC proposals. The bill is about limits on athlete participation, while the CFTC rulemaking is about how event contracts are treated under federal derivatives law.
Review does not settle state authority
What happens next depends on the White House review and on any later CFTC action. Until the measures are published, their final wording, timing and practical effect remain uncertain. The submission itself does not remove state gambling authority, and it does not undo the Tennessee outcome.
Court proceedings are likely to stay relevant, because the Sixth Circuit ruling concerned Tennessee and the particular sports contracts before it. As federal regulators weigh where event contracts fit, operators will keep facing an unanswered jurisdictional question.
