The U.S. Commodity Futures Trading Commission has submitted two regulatory proposals to the White House Office of Management and Budget for review, targeting how event contracts are classified under federal law. One proposal seeks to formally incorporate these contracts into the agency’s definition of swaps, while the other aims to clarify that they are not inherently gambling products. The moves come as the agency intensifies its regulatory campaign to assert jurisdiction over prediction markets, including platforms such as Kalshi, Polymarket, Crypto.com and Robinhood.

The proposals follow a series of legal challenges and divergent court rulings regarding whether event contracts tied to sports outcomes fall under state gambling laws or federal oversight. A recent ruling by the U.S. Court of Appeals for the Sixth Circuit held that Kalshi’s sports-related contracts are not swaps and remain subject to state regulation, contradicting an earlier decision by another appellate court that affirmed the CFTC’s authority. This legal fragmentation has heightened attention on the agency’s next steps.

If adopted, the new definitions could reclassify event contracts as regulated financial instruments rather than gambling offerings, potentially weakening state-level efforts to restrict or regulate prediction market platforms. The CFTC argues that such contracts are measurable, binary outcomes traded in structured markets and should fall under its mandate as a derivatives regulator. The agency has previously engaged in litigation to defend its jurisdiction, including suing states that attempt to assert regulatory control over these markets.

The submissions to the White House mark a procedural milestone, though the rules are not expected to take immediate effect. An interim final rule, if finalized, would allow the changes to take effect immediately while public comment is solicited. The agency has characterized both proposals as not economically significant, though their legal implications could be substantial. With only one sitting commissioner currently serving — Chairman Brian Quintenz, who has held the role in an acting capacity since the administration has not nominated replacements — the CFTC is advancing these measures unilaterally.

The regulatory push occurs amid broader uncertainty about the future of prediction markets in the U.S. legal landscape. While some courts have sided with the CFTC’s interpretation, others have deferred to state authority, creating a patchwork of enforcement. The outcome of these rulemakings could shape not only enforcement actions but also the trajectory of innovation in event-based trading platforms that operate at the intersection of finance, technology and civic forecasting.