The Commodity Futures Trading Commission (CFTC) has proposed a rule that would add event contracts to the legal definition of a swap. That includes contracts on sports, politics, culture and weather, the kind traded on Kalshi and other prediction markets. The proposal was published on 9 October 2026.[1]
What the CFTC is proposing
The CFTC says these contracts are already commonly treated as swaps in the industry, and that the rule would remove any doubt. Chairman Michael Selig described event contracts as tools people use to hedge risk, speculate and share information about future events, and as "commodity derivatives squarely within the CFTC's regulatory remit."[1]
According to reporting on the rules sent to the White House for review in September, a companion rule would go the other way and exclude casino-style gambling products from the swap definition. The aim is to draw a line between prediction markets and online casinos.[2]
Why the word "swap" matters
Swaps are regulated at the federal level by the CFTC. If event contracts are clearly swaps, platforms can argue that state gambling regulators have no say over them. Several states have challenged sports contracts in court, and recent appeals court rulings have not all gone the platforms' way. The proposal is widely seen as the CFTC's response to that fight.[2]
What happens next
The proposal is open for public comment for 30 days after it appears in the Federal Register, through Regulations.gov. After that, the CFTC can finalise it, change it or drop it. A final rule would likely be challenged in court by states that want to keep control over sports betting.
This follows the CFTC's June proposal on public-interest reviews. For the current situation state by state, read are prediction markets legal?
